free business plan template word

free business plan template word

The Importance of a Business Plan

1. Introduction

Entrepreneurs are often experts in their respective fields, developing the products around which their companies are based. Many of them are quite content working in this capacity, making a comfortable living as small business proprietors and staying small. However, researchers at the Small Business Administration (SBA) have found that those who take the time to write a business plan are 2.5 times more likely to follow through and actually start a business. This may be because those who take the time to write a plan are more aware of the costs and effort required and are more motivated to work hard to make their new business succeed. This is an important point with far-reaching implications. If having a business plan makes you twice as likely to grow your firm, you will be a part of a process that will contribute to the nation’s economic health and have a more important role in its local economy. This essay explains why it is so important to have a business plan, and goes on to explain the various types of business plans available as well as their intended audiences. The essay then details the six key sections of a business plan, what to include and how each of these sections tie into the success of the business. This essay will help to provide the small business owner with a clear understanding of how a business plan will be useful to their firm and what they should expect to pay if they hire someone to write a business plan for them.

2. Benefits of Having a Business Plan

An important benefit that a business can gain from a business plan is focus. Without a business plan, a business is likely to lose focus and aimlessly spend money and time as they go along with life. This often happens as there is no set directive as to where the business will be at a certain point. This leads to inefficiency as the business tries many different things at once, often trying to find what works. This is known as “shooting in the dark” and is often a symptom of a lack of strategy and a lack of knowing exactly where you want your business to be. Often that business will give up as it can’t sustain its expenses and perceive itself as a failure. All would have very likely been avoided had there been a sense of direction from a business plan.

In your business, when things are not going according to plan, a well-defined business plan can pinpoint exactly what has gone wrong or what has gone according to your plan. At that point, you can then examine what exactly you were thinking when you made that essential decision. Was it the right decision to take? What alternative strategies might you have? All this essentially is a program of problem-solving that if you’re going to be in business, you should be good at. If you are able to identify when and why you make the decisions you do, it’s most likely to prevent problems in the future. A lot of problems in your business can be dodged or entirely removed by being cautious and correct planning, and a business plan is the absolute best way to gauge that.

A business plan serves several important functions to someone who is starting a business. A business plan will make you look at several things you might not have thought of before to help your business succeed. A business plan will take time and effort, and if you do it right, then your business will succeed and you will have gained valuable information to be able to run that business. A business plan will also show you how things are going to start up in the beginning financially and how they will progress as time goes on. A business plan is a step-by-step activity that defines the who, what, when, where, and how your business will move into the next stage. Provided it’s kept updated, it will serve as a useful tool throughout.

3. Key Components of a Business Plan

As you can see the most indicative factor of the plan is that it will make future years projections based on the above year business plan template. Future years projections are essentially a hypothetical view of the future. They will be based around the prior year income statement, cash flow statement, and a pro forma balance sheet. The only changing the addendum of a contingency is simply any changes in the executive team. The contingency and alternative will be quite simple. This is due to fact that even in an adverse situation, this company is sole proprietorship whose only necessary objective is to re-establish the product. The only contingency would be a move to liquidate the remaining product for a cash flow increase.

The tax affects in this case depend on the inventory. For example, if there is a lot of inventory that has accumulated in the company, the retailer may have to discount those products. This means that the product costs move up into cost of goods and affect profitability. The depreciation is an estimate of the above average warehousing a retail space that was rented throughout the year. For example, you have a rented storage unit you use solely for inventory but you’ve recently rented a new one to store some old collectibles. In the next year, the cost of maintaining both storage units would be above what you’ve had in past year and this would be included.

The following income statement is a very simplistic look at an income statement for a generic retailer. The statement begins with the retailer’s revenue. Because this retailer has very few costs outside of inventory, the cost of goods is the only variable.

Analyze your business on either a cost or price basis. Because this will affect how you will price your product. If you are a cost leader, it is likely that the price will be a bit higher for you as it is more costly. However, if you are price leader, you will have to keep your product costs as low as possible, and this may situation may dictate where you buy. This pricing information will not only affect how much you sell a product or service for, it will affect how you get it to consumers. This is why this is so important. Buyers of an item and its price will use fairly strong product and buying criteria to decide where to make their purchases. These are all things that are critical to understand when going into the growth strategy of your business.

A business plan is composed of a narrative and several financial worksheets. The narrative template is the body of the business plan. It contains more than 150 questions divided into several sections. Work through the sections in any order that you like, except for the Executive Summary, which should be done last. Skip any questions that do not apply to your type of business. When you are finished writing your first draft, you’ll have a collection of small essays on the various topics of the business plan. Then you’ll want to edit them into a smooth flowing narrative.

4. How to Create a Business Plan

Business owners must make effective business plans, since these plans act as blueprints for the future of the business. There have been studies that show that businesses with a plan will outperform businesses without one. In most cases, creating a business plan allows one to identify the strengths of the business as well as the areas that need improvement. This can lead to a change in mindset, as when identifying areas that need improvement, a business owner may then think of being proactive in those areas as opposed to reactive if these areas were not identified. Too often businesses identify a problem, but never go any further to try and solve it. After strengths and weaknesses have been established the plan can then list specific goals to be achieved (Figure 3.1). These goals need to be specific, measurable, realistic, and time bounded, majoring one’s progress against these types of goals will provide a clearer objective of whether one is being successful or not. Failure can occur when there are no measures of success or too vague of a measure, as subjective goals are all too easy to let slide. Goals should be set also for internal improvement such as trying to take more of the market in a specific area and external improvements such as trying to grow a larger customer base. With goals in mind a business owner can then use the plan to keep pulling himself and his employees back on track. Mission statements are also an important aspect of a business plan. A lot of business owners have never stopped to think what it is they are trying to achieve or have only a vague idea. A mission statement should provide a concrete direction for the business, it is a description of the business’ reason for existence. The mission statement is timeless and never changing and it should be used as a reminder and to help keep the business from getting off track. With steps and a mission in place the final part of the planning process is to assign time and resources to the objective. This provides an indispensable reality check to see if the plans are indeed achievable in the current configuration of the business. If not an alteration to the goal or the allocation of different resources can be made to make it feasible.

5. Conclusion

Companies put a lot of thought and effort into their businesses. Even the most thought-out plan is at risk of not succeeding if the correct audience is not reached. This reason in itself is why it is important for a business to have a marketing plan. There are many different factors in the marketing world. A company may not have the properly trained employees to create a marketing strategy. Some companies may not have the finances to employ a marketing team. A marketing plan clarifies the key marketing elements of a business and maps out directions. The plan also aids employees that are not very familiar with marketing to understand the company’s direction. Finally, a marketing plan is a well thought-out detailed approach which is, in fact, the best way to achieve a higher competitive status and the best possible financial outcomes.

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