The first thing you should do is come to grips with the fact that you need a business plan.  In a study completed by the Small Business Administration entrepreneurs who had a written plan had a significantly lower failure rate than those who started without a written plan.  More than that, a well written, well researched business plan serves four main functions:

1.      Raising Capital – Most people find themselves writing a business plan to borrow or raise capital.  The simple fact is that if you had the money you may have started your business already...confident in the potential profitability of your venture.  Big mistake. 

It makes very little sense not to plan even if you have the money.  Lenders, Venture Capitalists, Angel Investors and Economic Developers all want to know the same basic thing – will this make money. 

Each looks for specific characteristics of a business that they are interest in, so be sure to consider who you are writing the plan for before you start writing it.  In our Getting a Business Loan, Economic Development Financing, Investor Financing aricles on this website there are detailed explanation of each of the above sources of capital.

2.      Strategic Plan – A good business plan also serves as a strategic plan.  A well written strategic plan identifies the mission of an organization, internal/external driving forces, and identifies Strengths, Weaknesses, Opportunities and Threats (SWOT).  While all of these may not be specifically present in the business plan, the reader should be able to identify these items from the different sections of the narrative.

3.      Feasibility Test – The business plan serves as a feasibility test for your business. As you complete a plan for your business it will become clear whether or not your initial assumptions about the idea hold true. 

It is easy to make an idea work in your head...every entrepreneur can imagine finding the best location, creating the best marketing campaign, you can even make your business as profitable as you wish...in your head.  But, something magical happens when you put that idea down on paper in black and white and are forced to justify your assumptions in determining profitability. 

Every section of your plan holds valuable information that will help frame your expectations for a reasonable range of sales, cost of sales and daily operating expenses (often called business overhead).  Your business plan feeds information into your financial projections and backs the numbers with realistic assumptions. 

The business plan and financial projections act in tandem creating a feasibility study as to weather this idea will be profitable or not.

4.      Opportunity Discovery – So, what if you complete your plan and find that it is not feasible?  Don’t give up!  Take a hard honest look at your plan and determine if there are changes that could be made to your idea to make it profitable. 

Don’t get locked down thinking that things have to be a specific way. Some of your best ideas will come out of the discovery of new markets, new processes, new ways of distributing or producing and finding a niche to compete in.

Let the writing of your business plan guide your business model as opposed to reflecting what you think your business model should be.  In addition, don’t be afraid to change your idea completely.  Many people discover that there are better opportunities elsewhere, usually with in the same industry somewhere up or down the supply chain. 

Last but not least, don’t be afraid to ask for help.  Contact your local Small Business Development Center or SCORE office for assistance in writing your business plan.