The business plan is a key component for a successful business.

A plan is vital because it:

•  Provides an organized system for researching your business

 •  Drastically increases your chances of success

•  Provides a game plan for your business to follow

•  And provides insight into your business to facilitate funding and investment.

Aside from these general business plan objectives, remember that every plan is unique. Don’t struggle with trying to make your plan “fit” into the generic mold.

Always customize your plan to your specific business objectives. Be clear, concise and detailed. Focus on the quality of the content, rather than the quantity of pages.

Once complete, the business plan should identify the expectations you have for your new or existing business.

Review your plan regularly; make appropriate changes when your plans and strategies change.

Dos and don’ts

of writing a plan

Writing a business plan is a crucial step in starting or operating a small business. However, the thought of writing a business plan can seem overwhelming. To help you avoid some common errors, consider these suggested dos and don’ts of writing a business plan:

Do …

•  Understand that the planning process is critical to running a successful business. You gain significant expertise by writing your own business plan. It is typically not a good idea for someone else to write your plan, since you are the expert in your business and you may need to verify the assumptions you have about your business idea.

•  Utilize a business plan outline to determine what to include in your plan. The business plan outline serves as a guide to how to format your business plan.

Once complete, the business plan should identify the expectations you have for your new or existing business.

 •  Answer key questions. A quality business plan contains considerable detail and answers pointed questions concerning who, what, where, when, why, how and how much. Make sure this information is clear.

•  Take time to research all components and write a comprehensive, detailed plan. If you are going to use your business plan to obtain financing, the completed plan should “tell the story” of your business to a potential lender.

The plan should serve as a stand-alone document, meaning that all business issues are addressed without requiring additional verbal explanation.

•  Include market research in your plan. Market research includes important information about your current and potential customers, such as demographics (income, age, etc.) and industry information.

Your business plan should discuss the size and market for your business.

Market research helps to determine the feasibility of your idea, an appropriate marketing strategy for your customers, and the product or service’s likelihood of selling.

In addition, market research lends credibility to your plan.

Always include such details in your business plan and cite the data sources.

•  Include a financial plan and projections. This is one of the most critical parts of your business plan. The financial plan provides the numbers that correspond to your written plan. It is important to research the expected future revenues and expenses for your business.

Monthly income statements and cash flow projections should be included.

Existing businesses should also include historical financial statements.

•  Explain how the plan relates to the financial projections. You should always include a narrative explaining the assumptions you used to develop income statement and cash-flow projections. You must demonstrate that your numbers are reasonable.

•  Research costs thoroughly in order to provide more accurate numbers. Taking time to gather cost estimates improves your chances for success. Determine all possible costs for starting and/or operating your business.

•  State the amount of funds requested if you are using your plan to obtain financing. If you are going to use your plan to apply for a start-up loan or growth funding, specifically state the amount of funds requested and the planned use of those funds, and demonstrate how those funds will be repaid.

In addition, it is important to state the amount of your owner’s cash contribution to the project, as well as to identify the collateral available to secure the loan.

 •  Revise and modify your plan as circumstances change. The business plan is a dynamic document. Circumstances are likely to change within the course of planning, starting and operating your business. Always update your plan to reflect such changes.

•  Use your plan to monitor actual performance and to compare to your expectations. Your completed plan is a valuable tool in the management of your business. Review the progress and performance of your business against expectations and assumptions. Modify your plan when appropriate.

Use your plan to guide the decision-making process so that your business stays focused on achieving its long-term goals.

            

Don’t …

•  Guess what your costs may be. Use historical averages, if yours is an existing business.

Make a list of one-time and recurring costs, so you do not overlook costs that may not be obvious (e.g., signage, janitorial service or waste disposal, licenses and permits, deposits, etc.).

Try to obtain price quotes from knowledgeable sources, such as the suppliers of your inventory, fixed assets, etc. If leasing a space, ask the lessor or other tenants for cost information concerning utilities, etc.

Additionally, you may ask advisors about price quotes on insurance, professional fees (CPA, attorney), etc.

•  Leave out your experience and skills. Your business idea or current business strategy may be a viable one, but without good management skills to execute it, your chances for success are poor. Past experience within the industry is valuable and gives you credibility. Thoroughly describe your past experience with the business.

If you are new to the business and with limited experience, discuss your plans for training, hiring key personnel, etc.

•  Forget the competition. Your business will not operate without external pressures, such as competition. Address the strengths and weaknesses of your business idea, and the strengths and weaknesses of existing and potential competitors.

And one more do: Do submit your plan to the Clatsop Community College Small Business Development Center for feedback and guidance. The CEDR SBDC can provide valuable assistance and recommendations for improving your plan.

Make an appointment with one of our business counselors to go through this in more detail, and to share tools, techniques and information on the best steps to take in this critical process.

(CEDR is Clatsop Economic Development Resources. SBDC is the Small Business Development Center at Clatsop Community College.)