"A business plan is an essential roadmap for business success,“ according to the SBA. "This living document generally projects 3-5 years ahead and outlines the route a company intends to take to grow revenues.“
Creating a business plan is one of the most important and overlooked steps of starting a business. Many believe that a business plan has to be a complex document, but this is not the case. In his Entrepreneurship class, Prof. William Rossi of the University of Florida tells of one of the best business plans he has ever seen as being written on a napkin.
Despite Prof. Rossi's example, the more complete a business plan, the better chance you have at receiving funding. If investors do not believe you have put in the time to make a business successful, why would they invest their money in your business?
One of the most important parts of the business plan should be market research. In this section you want to cover several topics:
- Describe your industry and what stage of the industry life cycle it is in, introduction, growth, maturity or decline. Identify the major players in the industry.
- Identify your target market. Your target market should be as narrow as possible. The more broad the target market identified, the less focused your plan will be.
- Define how much market share you expect to gain. You must be able to back up the information you give here.
- Define your pricing structure, gross margin levels, and any discount you plan to use.
- Identify your competition and their strength in the market.
- Identify any regulatory requirements, either from customers or the government. List any impact from the regulation, either cost or operational impacts.