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What Makes a Good Business Plan

ArticleID 119  
Writer Isaac Thuku
Category Personal Article

A comprehensive business plan is crucial for a start-up business. It defines the entrepreneur’s vision and serves as the firm’s resume.

There are many reasons for writing a business plan:

• To convince oneself that the new venture is worthwhile before making a significant financial and personal commitment.

• To assist management in goal-setting and long-range planning.

• To attract investors and get financing.

• To explain the business to other companies with which it would be useful to create an alliance or contract.

• To attract employees.

Importance of a business plan for an entrepreneur

A business plan can help an entrepreneur to allocate resources appropriately, handle unexpected problems, and make good business decisions. A well-organized plan is an essential part of any loan application. It should specify how the business would repay any borrowed money. The entrepreneur also should take into account all start-up expenses and potential risks so as not to appear naive.

However, according to some experts, a common misconception is that a business plan is primarily used for raising capital. They suggest that the primary purpose of a business plan is to help entrepreneurs gain a deeper understanding of the opportunity they envision. According to them; “The business plan process helps the entrepreneur shape her original vision into a better opportunity by raising critical questions, researching answers for those questions, and then answering them.”

Some entrepreneurs create two plans: a planning document for internal use and a marketing document for attracting outside investment. In this situation, the information in each plan is essentially the same, but the emphasis is somewhat different. For example, an internal document intended to guide the business does not need detailed biographies of the management. However, in a plan intended for marketing, the background and experience of management may be the most important feature.

Qualities of a Good Business Plan

• A standard business plan is usually about 40 pages in length.

• It should use good visual formatting, such as bullet lists and short paragraphs.

• The language should be free of jargon and easy to understand.

• The tone should be business-like and enthusiastic.

• It should be strong on facts in order to convince people to invest money or time in the new venture.

The basic elements of a standard business plan include:

• Title Page

• Table of Contents

• Executive Summary

• Company Description

• Product/Service

• Market and Competition

• Marketing and Selling Strategy

• Operating Plan

• Management/Organization

• Financing

• Supporting Documents

What Makes a Good Business Plan
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