You wouldn't set out on a journey without a map, right? So why would you start a business without a plan? "A business plan provides a road map for a company and its executives to follow," says Bill Crookston, an associate professor for the Entrepreneur Program at the University of Southern California in Los Angeles.
A business plan isn't just for your own peace of mind, however; investors will demand it when you search for funding. Your start-up plan should focus on marketing and financial information and must portray a route your company intends to follow--financiers could withdraw credit if you don't meet your goals, Crookston says. And forget about hiring an expert to do it for you; each entrepreneur should create his or her own plan, he stresses.
With that in mind, the following three points should be addressed when drawing up your plan:
1. The management: Who makes up the team? What are their titles? What is their experience? According to Crookston, this is often the most important piece of information for financiers.
2. The market: Who are your customers? What is the benefit of your product or service?
3. Financials: What is your projected profit and loss, projected cash flow and, in some cases, projected balance sheet?
Then, keeping it at less than 30 pages, flesh out the plan: Use information that includes descriptions of your product, supplier relationships and inside operations. You should also include plans for action, growth and contingency.
The final step is to create your on-ramp: a brief overview of the plan placed at the front. Then buckle up--you're on your way.