Is a business plan essential to starting a business?

Thinking of starting a business? If so, you will have probably been told to craft a comprehensive business plan. The question is, how important is a business plan really? And what should a good quality business plan include? We investigate below.

Is a business plan actually that important?

In short, yes. A business plan acts as a road map to success and it will guide you throughout the process of getting your business off the ground and making it through those critical first few months.

It will provide you with confidence and peace of mind as you embark upon the exciting new venture and also functions as a helpful tool for securing funding should you decide to apply for a loan or seek out enthusiastic investors.

What should your business plan comprise of?

There are a few aspects that are super important to include in this essential document for entrepreneurs. Here is a quick breakdown:

Executive summary: This summary should provide a concise round-up of your business plan as a whole. It should be around one – two pages in length.
Business overview: This is a brief description of your business. It should communicate your business idea, the type of business you plan to start, where you intend to open its doors (location), and the history behind the formation of the business.
Operations plan: Your operations plan describes how you plan to operate your business day-to-day.
Market analysis: The market analysis offers details regarding your specific target market and why you believe there will be a demand for your products and/or services.
Products and services: Here, you will include a description of the products and/or services that you wish to offer the public.
Sales and marketing: This is where you explain how you intend to sell and market your brand and your products/services.
Competitor analysis: You will provide research into your competitors, analysing their strengths and weaknesses, and why you believe you will be able to create a competitive ‘edge’.
Management team: Here, you will supply background information regarding all of the key players involved in your business.
Financial plan: The financial plan is arguably the most crucial aspect of your business plan. Be sure to detail how much money you will need to start the venture, how much money you will need to make over the course of the first few months and years to sustain the business, and how you intend to use the funds available to you.
Projections: In this section, you must provide estimations regarding how much income you believe your business will realistically make for the next two – three years.