Join our Waitlist for Expert Advice!

Why You Need a Business Plan Just because you think you know where you want to take your business, it doesn't mean you shouldn't put it down in writing.

Q: Writing a business plan sounds like a lot of work. I already know the steps I'm taking to start my new business--do I really need a business plan?

A: Yes, you do. About the only person who doesn't need a business plan is someone who's not really going into business. You don't need a plan to start a hobby or to moonlight from your regular job. But if you're beginning or extending a venture that will consume substantial money, energy or time, and that you hope will be a full-time business, you should take the time to draft some kind of plan.

While it may sound intimidating, writing a business plan isn't really difficult. After all, a business plan is just a written description of your business's future. That's all there is to it-a document that describes what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've written a plan, or at least the germ of a plan.

So what do you need to include in your plan, and how do you put one together? Your plan should convey your business goals, the strategies you'll use to meet them, potential problems that may confront your business and ways to solve them, the organizational structure of your business (including job titles and responsibilities), and finally, the amount of capital required to finance your venture and keep it going until it breaks even.

There are three primary parts to a business plan. First is the business concept, where you talk about the industry, your business structure, your particular product or service, and how you plan to make your business a success.

The second is the marketplace section, where you describe and analyze potential customers: who and where they are, what makes them buy and so on. You should also describe the competition and how you'll position yourself to beat it.

Finally, the financial section contains your income and cash flow statement, balance sheet and other financial ratios, such as break-even analyses. This part may require help from your accountant and a good spreadsheet software program. It's a good idea to buy business plan software to help you prepare your plan. The software will prompt you, making it easy to "fill in the blanks."

More Solutions

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

You Have One Month Left to Buy a House, According to Barbara Corcoran. Here's Why.

"If you are planning on waiting a year and seeing where interest rates go, you are out of your mind," Corcoran said.

Thought Leaders

These 3 Trends Will Change What It Means to Be an Entrepreneur in 2025

Here are three entrepreneurship trends from the new Global Entrepreneurship Monitor report that are changing the landscape for the future.

Side Hustle

I Made $14,000 in 1 Week With a Spontaneous Halloween Costume Side Hustle — Here's How

Sabba Keynejad was in art school when he started to refine his entrepreneurial skills.

Social Media

Stop Chasing Algorithms — Here's How Creators Can Take Control of Their Content and Monetize on Their Own Terms

Social media platforms promise creators visibility, but the real challenge lies in relying on algorithms for income.