Editor's note: This article was excerpted from Business Plans Made Easy , a guide to creating a high-impact business plan. The process of writing a business plan helps you take a thorough, careful and comprehensive look at the most important facets of your business, including the contexts in which it operates. Just raising questions can sometimes lead to a solution, or at least ensure that if conditions change you won't be forced to make decisions hastily. The ongoing "what if this or that happens?
A business model is a framework for how a company will create value. Ultimately, it distills the potential of a business down to its essence. It answers fundamental questions about the problem you are going to solve, how you will solve it, and the growth opportunity within a given market. Creating a business model is essential, whether you are starting a new venture, expanding into a new market, or changing your go-to-market strategy.
While some owners may be tempted to jump directly into startup mode, writing a business plan is a crucial first step for budding entrepreneurs to check the viability of a business before investing too much time or money. The purpose of a business plan is to help articulate a strategy for starting your business. It also provides insight on steps to be taken, resources required for achieving your business goals and a timeline of anticipated results. For existing small businesses, a business plan should be updated annually as a way to guide growth and navigate the expansion into new markets. Your plan should include explicit objectives for hiring new employees, market analysis, financial projections, and potential investors.
A business plan is also a road map that provides directions so a business can plan its future and helps it avoid bumps in the road. The time you spend making your business plan thorough and accurate, and keeping it up-to-date, is an investment that pays big dividends in the long term. Your business plan should conform to generally accepted guidelines regarding form and content. Each section should include specific elements and address relevant questions that the people who read your plan will most likely ask. Generally, a business plan has the following components:.