It is more common than some people realize for entrepreneurs to start a company without ever writing out a business plan. Such entrepreneurs may consider themselves flexible and claim that they want to adapt their practices to real-time feedback.
However, a lack of a business plan can put them at a disadvantage when communicating with prospective investors and/or regulatory officials. Almost every organization, even a small, closely-held LLC owned by one person, can benefit from having a business plan. What should every business plan include?
An exploration of the business model
There are dozens of different possible business models within any industry and even many different ways to structure similar business types. Therefore, it is of the utmost importance that someone planning a new business venture talk about exactly how the company will operate.
A business plan should talk about what the company will do and how the company will perform that work. That way, they can look at the technicalities that might apply to their business model, such as laws that might limit their operations.
A financial analysis
An organization has to control its costs in order to generate profit. In fact, even popular goods and services can be difficult to monetize successfully, which is why creating a comprehensive list of what it will cost to operate the company and then trying to determine how to price goods or services is important before someone starts investing in a concept.
Talking about how the company will market itself and establishing an estimated profit margin will be important for setting the company up for success. Estimates of operational costs and a review of how quickly competitors expanded could help the company plan a rough budget before setting up shop. Financial projections for the future and also a discussion of what investments the company requires will be important inclusions in a business plan.
Details about executives
Entrepreneurs and the executives they hire will have a major impact on the success of an organization. Most business plans will discuss the roles and unique talents of the top people involved in the company. Detailed discussions of jobs performed and workflow may also be valuable additions to a business plan.
The idea is to allow anyone who reviews the plan to understand what the company will do and how profitable it could potentially become. It can help to make the case for the company to potential investors while also guiding its development. Including thoughtful details in a business plan and seeking legal guidance proactively can help entrepreneurs achieve their dreams of starting successful organizations.