A business plan works like a roadmap: it keeps you, and everyone involved in your venture aware of the direction, and on the right path. Here, the legal experts at ENLawyers explain the necessity of having a written business plan.
A business plan should ultimately contain four critical components: the business concept, marketing plan, competitive, and financial forecasts. This information is essential for you, and potential investors, to determine whether your business concept is viable in the real world.
Many other questions will be answered as you construct your business plan. What potential hurdles may your business face in the marketplace? What is your target demographic, and how will you market to them? Knowing your competition can help you identify problems others have faced, as well as brainstorm ways to stand out among your competitors. A strong marketing plan will improve investor trust in your business, as they will know that you have ways to attract and keep customers, and in turn profit. Your business plan will also help investors have a stronger grasp on your start-up costs, and understand how much you are looking for them to invest. The more detailed, clear, and research your business plan is, the more enticing you will look as an investment.
Future growth and changes in the market should also be taken into consideration within your business plan. Knowing about which business trends are growing and slowing, new market innovations and various directions your business can branch off into is important for you, your investors, and partners you wish to bring on with you. Part of foreseeing future outcomes includes a financial forecast. Detailing such things as a break-even analysis, profit-and-loss forecast, and cash flow projection will help you create a cost-benefit analysis, which will allow you to decide whether your plan is solid, shaky, or completely unstable. It is better to rework major financial concerns now, in the planning stage, than months or years into the life of the business.
ENLawyers’ Bottom Line
The road to success in business is not always clear, and some future forecasts will not be accurate. While you cannot account for all the evolutions and difficulties your business will face, a sound business plan can help take much of the guesswork out of starting your venture. Partners and investors will have more reason to back you, and you can confidently manage a business with explicit goals, directions, and revenue sources.
If you are a small business owner and would like additional information or to meet with an experienced business attorney and advisor, contact the Law Offices of Eldridge and Nachtman.