A business plan is an essential document for any new business. It is the route map of how an idea manifests itself into a viable business. It is also an essential document if you need to raise finance for your business.
As a new venture, the initial part of a business plan will focus heavily on research into the potential market your business operates in, marketing, sales forecasting, competitor analysis and amongst other things financing requirements and sources.
This information becomes the basis of your financial forecasts. Once completed, you can use the plan to monitor the performance of your business.
Where you require external funding, perhaps from a bank, a business plan is crucial. Banks, like any lender, will require considerable information to support loan applications. This can include financial forecasts, historic annual financial statements and management accounts. Having a good business plan will help persuade lenders of your professionalism and that you take financial planning seriously. The plan should include sales and market information and how current sales will translate into the future sales forecast. In addition, it will identify why you need the finance and how you will pay it back.
Committing to that first business plan and investing time in developing it may seem unnecessary when there are so many demands on your time. However, the skills learnt and the perspectives gained will help you to grow the business, raise finance and, who knows, one day potentially sell a successful business.