Define a Business Plan

A business plan is a comprehensive document that details what your business does and how the business goals will be achieved. Your business plan is a planning tool for the business itself and to attract capital from investors and lenders. A good business plan shows stakeholders your commitment to the success of the business, which helps reassure investors of the soundness of the business.

Organization

• A business plan is a planning tool that organizes every aspect of your business. One of the key planning elements is your legal business structure. The legal structure establishes your business as a sole proprietor, a partnership or a corporation. Your structure has implications for your income and taxes.

  In addition to structure, your business plan divides the responsibilities of operating the business among you and your partners or employees. Your planning also indicates who owns the business. If you have partners, establish the ownership stake you and your partners own in the business.

Product

• The business plan also communicates the purpose of the product or service your business provides. According to the Small Business Administration, the business plan emphasizes the benefit your customers gain from your product. The business plan includes the full details of your product, while focusing on the details that create and enhance your competitive advantage in the business environment.

Market Analysis

• A business plan also includes a detailed analysis of your market. Your market analysis includes an assessment of your industry as a whole. This includes industry characteristics, trends and growth rates. For more precise context, identify the particular target market in which you plan to plan to operate. The SBA recommends supplementing your analysis of the target market with geographic location, cyclical trends and needs.

Projections

• If your business plan is for a new business, your financial projections are based on reasonable assumptions of your profitability. Your business plan is one of the primary tools to communicate the financial potential of your business. Investors and lenders are less likely to extend capital if your projections are exaggerated or unreasonably high. However, avoid underselling the understating the potential of your business.

Strategy

• Identify the strategies most suited to the success of your business. Your business plan is also a strategy document that identifies opportunities from the research you conduct to establish your business. The SBA recommends monitoring the factors that affect your business to identify strengths and weaknesses in your operations. Strategy becomes more important as your business grows and becomes more competitive.