Business Startup Advice: Develop a Business Plan

Say the words "business plan" to a potential small business owner and watch them scramble to get away. For reasons I, as a former small business counselor, could never quite fathom, that was the inevitable result.

Business planning is an essential piece of the development of a successful small business. Please note that I said "successful." Almost anyone can start a small business if they have a good idea, the appropriate skill, and enough money. However, developing a successful small business - - one that can withstand all the problems that will be thrown its way - - is something else altogether.

There are two basic reasons for writing a business plan. The most common reason is to provide a lender with detailed information on all of the aspects of the business. The plan gives a potential lender or investor insight into how the business will be conducted. It details how the funds sought will further the goals and objectives of the business. It also explains how the loan will improve the worth of the business and enable the loan to be repaid in a timely fashion. Finally, it details how the money will be used and it backs everything up with solid information.

All lenders and even the SBA will require a business plan from those seeking funds to start or expand a small business. The plan, if properly done, gives them enough insight into the potential business venture or business expansion to determine the payback viability of loan or investment funds.

The most important reason for business planning, however, is that the business plan actually serves as a blueprint for the business. When written with sufficient research and completed with feasible financial projections, the plan can tell the owner whether or not the new business (or expansion of an existing business) will work. Furthermore, with continuous update, the plan can be used throughout the life of the business to project its future movement.