The Importance of Creating a Business Plan

Posted on November 1, 2010 by

If you have small business or are want to start your own small business one of the first things you need to do in order to be successful and around for a long time, is to create a business plan.  A business plan is basically a plan of where you want your business to go over the next five or ten years.  There are a few steps to creating an effective business plan and this article will go through them.

The first step is to do a budget. When doing a budget for you small business plan you need to decide how much money it is going to cost to start up your business and maintain until you start making a profit.  After you decide how much it’s going to cost to start up your business and stay afloat until you start making a profit, which for some businesses can be a few months and for others a few years, this will help you gauge how much you should price your products or services. Take into account, however, that pricing your products or services too high will not draw customers in, and using the strategies of pricing low to attract more customers is not only an effective strategy because it can backfire.  Start by visiting other local business with a similar product or service and see their price rang e to get an idea of where you should be.  While you are in the process of doing your budget it is always a good idea to talk to an account just to make sure all of your bases are covered.  Accounts are trained in budgeting and may be able to think of things you over looked.

Once you’ve complete your budget, need to decide where you want your business to go every year. For example, where do you want your business to be in a year, what profit margin do you want your business to be in two years? These questions will help you focus on specific goals, and once you have specific goals you will be able to come up with specific ways to reach those goals.

After you’ve finished your business plan, be sure to use it! Look at it every couple of months just to make sure you’re staying on track, and if you aren’t be sure to either change what you’re doing to get on track or alter your business plan.