What is the purpose of a business plan?

The main purpose of a business plan is to raise funding for a new enterprise. Without a good business plan, no bank, individual investor or venture capital firm will consider providing you with the money you need to start up a new business, to expand an existing business, or capitalize on an opportunity.

But it's more than just a way of impressing would-be investors. An effective business plan also ensures that everyone on your business team knows the direction of the business and is committed to the same goals and objectives. The business plan clarifies the business' targets and develops a strategy for meeting those targets.

What should a business plan contain?

The exact content of your business plan will depend on such things as the type of business you want to create, the purpose of the plan and your own personal style and preferences. However, all good business plans should include:

* Background and history of the business
* Details of the products and services the business offers
* Evidence of the market potential for your business (target markets, competitors, market share)
* A marketing plan setting out what strategies you will use to reach your target markets
* The business' resource requirements
* A financial plan, including cash flow projections
* Information about the management team.

The business plan will also need an executive summary and appendices, which will include any documents that are too bulky to go into the plan itself, such as copies of relevant documents (leases, contracts, architectural plans), press releases, CV's of the company's principals, financial statements, etc.

The foregoing summary is provided for information purposes only and is not to be considered legal or business advice. The information may not be complete, accurate or applicable for any particular situation and should not be relied upon.

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