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Business Plans

What is a business plan?

A business plan is a document that provides direction and a path for your business to follow.  A successful business plan will clearly outline a timeline for you business while highlighting majors goals and initiatives for your company.  The timeline will typically be short term of 1 year, 3 year, and 5 years.  The business plan should detail the core business and the products and services that will be offered.  The most important critical aspect of a business plan are the estimates that are used to make the plan.  A business plan is only as good as the estimates that it is comprised of.

How are estimates used in a business plan?

The estimates used in a business plan are simply a collection of numbers and dollars for estimated revenues and expenses for your business.  The estimates must be realistic and in a perfect situation, you will have a baseline of information to go by when preparing your estimates.  A good baseline may be prior experience in the industry, or published figures in your industry.  If you are comparing your company to another company you will want to ensure that your estimates are accurate and not far fetched.  For example, is it most probably not accurate to compare your company to either Google or Yahoo.  It is important to make sure that your choose a competitor that matches your business size and product offerings.

What comprises a business plan?

Typically a significant analysis of your industry and writeup of competitors, strengths and weaknesses in the industry, competitive advantages, price analysis, and a very detailed excel spreadsheet model.  Spreadsheet knowledge is critical when preparing a business plan, unless you are attempting to use a software to prepare your plan.  Most good business plans are modeled using Microsoft Excel.
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