A business plan is a tool that precisely defines your business and identities your goals. It helps you properly allocate resources, handle unexpected complications, and make good business decisions. An effective business plan should help you make projections, allocate resources, focus on key points, and prepare for both problems and opportunities. Businesses need plans to optimize growth and development according to priorities. It is a crucial part of the any business loan application, because it provides specific and organized information about your company and how you will repay borrowed money.

Unfortunately, many people think of business plans only for starting a new business or applying for business loans. It is important to realize that busi ness plans are vital for running a business, whether or not the business needs new loans or new investments.

Before you begin writing your business plan, you should ask yourself these important questions:

• What service or product does your business provide?
• What need does your service or product fill?
• Who are the potential customers for your product or service?
• Why will they purchase it from you?
• How will you reach your potential customers?
• Where will you get the financial resources to start your business?

Using the Business Plan

A business plan is a tool with three major purposes:

Communicating - the business plan is used to obtain loans, attract investment capital, and assist in attracting strategic business partners. A comprehensive business plan shows whether or not a business has the potential to make a profit. It requires a practical look at almost every phase of business and allows you to show that you have considered potential problems and decided on alternatives before actually launching your business.

Managing - the business plan helps decision makers track, monitor, and evaluate progress. The business plan is a work in progress that owners will modify as they gain knowledge and experience. By using a business plan to establish timelines, you can gauge your progress and compare your projections to actual accomplishments.

Planning - the business plan guides you through the various phases of your business. Many business owners share their business plans with their employees to i nform them and others about business goals. A well-developed plan will help identify roadblocks and obstacles.