What Is A Business Plan And Why Is It So Important?

What is a business plan and its importance is very often under-estimated because people starting an online, homebased business do not always understand the critical role a business plan plays in the overall success or failure of a business.

So What is a Business Plan?

A business plan is a document that describes your business objectives and how you're going to become profitable. It is a logical and organized way of looking at all aspects of your business. It is a living, breathing document that should be reviewed and updated as your business develops and grows.

When Do You Need A Business Plan?

Some people believe that a business plan is only required when applying for a loan from a bank. This is only partly true. Having a well researched and documented business plan will go a long way to you achieving your goal of success.

Do Even Small, Online Businesses Need A Business Plan?

Yes, even a small, start-up business run by only one person!

The reason for this is that your business plan gives you a framework and sets out the direction you want your business to take. It documents the result of your research and preparation. It also defines how each area of your business will operate and ensures you have enough resources to operate your business.

How Long Does It Have To Be?

I can hear you asking: "But how long does this document have to be?" The good news is that a business plan doesn't have to be long. It can be as long (or as short) as you like. What's important is the quality of your research and the information ... not the length of the document. "Phew, that's a relief I can hear you say"!

Five Esential Elements Of a Good Business Plan

In additon to understand what a business plan is it is also important to understand that when developing your business plan there are specific business plan basics that need to be included in your plan. However before we even start with the actual content of the business plan ther are five essential elements of a business plan that are critical if its to be of any value at all.

When developing your business plan ensure that you have kept the following in mind. Stop and ask yourself the following? If the answer to your question is "yes", continue, but if it is "no", stop and revise what you have written until you are satisfied that you can answer "yes" to each question.

Is my business plan simple?

Make sure your business plan is easy to understand and to implement. Is it a practical document and will anyone who picks it up get a clear picture of what you're wanting to achieve?

Is my business plan specific?

You need to ensure that your goals are specific and measurable. Does your action plan include deadlines, budgets and who's going to get the job done.

Is my business plan realistic?

Don't set yourself up for failure. Ensure that when you set your goals that you've actually looked at what it'll take to implement. Make sure that your sales goals are achievable eg work out how many items you have to sell to achieve that goal.

Is my business plan complete?

Make sure that you have included all the relevant aspects of your business. While the purpose of some business plans differ there are specific business plan basics in every document. Things that are omitted have a habit of rearing their ugly head when you least expect it. Make sure you're thorough and rather include too much detail rather than too little.

Are My Goals SMART?

Make sure that you have adopted the principle of SMART goals ie are your goals:

  • specific
  • measurable
  • achievable
  • realistic
  • timely

Now that you have a thorough understanding of what is a business plan, the next step is to get down to the nitty-gritty of writing your own business plan. Don't worry though .... I have a great article that can help you substantially with the process.