Business Plan Basics

When you take time to think about a plan for your business, you realize there are three main reasons to have one:

1. To launch a new business;
2. To manage and grow an existing business; and,
3. To value and pass on or sell your business.

These are the basic reasons, and each is obviously more involved than creating a document that sits in a forgotten file somewhere in the office. A business plan is a valuable tool in creating and operating a profitable commercial enterprise.

It starts when you have an idea for a product or service you believe people need and will want to purchase. You plan to deliver a quality product or service at a fair and reasonable cost in the most economical way to generate profits. Basic business. Employing professionals helps you with considerations you may have missed, such as sales tax issues if you do business in several states, licensing and permit requirements, or the logistics of delivering your product to market.

Your start-up business plan can also be of value when you need start-up capital and approach a bank, credit union, or other lending institution.

A viable business plan then helps you continue to make adjustments as the business begins to grow, such as adding personnel, expanding an existing location, or finding a new supplier for raw materials. It also indicates you have a game plan and are following it, which is critical when it comes to bank loan reviews or the need for additional financing.

A business plan is constantly changing. Need products require more thought and planning. Changing services should be planned to enhance your customer relationship while minimizing costs. Your plan is part management tool, part fluid process - both with a focus on growing your business.

And, at some point, you may consider selling your business. If you have credible market research, reliable forecasts and accurate financial records, the potential buyers can pick up where you have the business and take it from there.