A business plan can be intimidating for an entrepreneur in the startup phase. Many make the mistake of putting off the creation of this fundamental document, preferring to concentrate on short-term objectives, which can be more exciting.
Others make an even bigger mistake: they set up their business plan, but they don’t invest the time and effort to make sure that it is well-thought-out and backed by solid data.
What exactly is a business plan?
The business plan is a document that contains all the information needed to understand the focus of a new business and the financing needed to implement the project. When you present someone a business plan, that person must be convinced to share your enthusiasm and your confidence in the success of your business.
The business plan must demonstrate that your project is rooted in a certain amount of objectivity, that you validate your business decisions based on solid and recent knowledge.
What do I include in my business plan?
There is no universal template for establishing a business plan. A good business plan contains an analysis of the market that you want to enter. It outlines realistic financial forecasts, demonstrates how you plan to make a profit and how to position yourself in relation to the competition.
The business plan also details your needs in terms of infrastructure, equipment and staff. It describes how you plan to surround yourself with a team of talented people and how you will promote your goods or services.
What is it used for?
The business plan for a business demonstrates the seriousness of the entrepreneurial initiative to investors and lenders. It reveals your financing needs and explains how you will succeed in order to build the confidence of your potential lenders.
It can be used to set clear goals for your business and can help you get back on track if you lose sight of these goals. Your business plan should help you anticipate problems before they become emergencies.
By presenting your plan to investors, you may have the opportunity to face objective criticism about certain aspects of your plan. Using projections, you could make your mistakes on paper before they become costly disasters in the field.
Even when the business is up and running, a well-thought-out business plan remains a powerful management tool.
Other resources to consult
By drawing up a good business plan, you have a tool to understand and manage the risks that you will inevitably face as an entrepreneur. To learn more, we suggest this Info entrepreneurs article or this guide from the Canada Business Network.
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