A business plan is an operational guide to your business. It should be used to define the scope of your business, the goals you establish for the business, the methods you will use to reach those goals, and the potential profitability of your business.
It can also be used to measure your progress towards your goals, as a reference to keep you from deviating from your goals, and as a communications tool to give bankers and investors the information they need if you are looking for a business loan, grant, or private funding.
Anyone who wants to start or run a business successfully needs some type of plan. After all, building a business isn't much different than building anything else. There are a lot of pieces to put together and a lot of details that need to be coordinated.
Once you've got your business up and running, a business plan serves as your road map to success. By periodically comparing where you are and with where you want to go in the business, you can keep yourself on course, and if you spot problems developing, make necessary changes in either methods or your ultimate goals before your little problems turn into huge ones.
The amount of detail that goes into your business plan should depend on what you stand to gain or lose in your business.
If you are going to turn your hobby into a part-time business and won't have to spend more than a couple hundred bucks to do so, your business plan could be just a page of notes. You'd want to sketch out what you will sell, how you will sell it, how you will price it, and what start-up steps (getting permits and licenses, business stationary, insurance, etc) you will need to take.
Considerably more thought and research should go into your plans, however, if any of the following circumstances apply:
- you will be spending a significant amount of money to launch the business
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