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A common misconception is that a business plan is only useful for businesses which are seeking investment or a loan. The truth however is that a business plan contains a lot of useful information for new businesses and can be a vital tool in the business' road to success. There are many elements to a business plan which can make it easier for the business to survive and succeed:

* Estimates and Sales Figures - having a business plan allows you to estimate your finances and work out your breakeven point. Every start up business should be aiming to at a minimum breakeven. By knowing how many sales you have to make to break even, you can stay organised and check your sales monthly to see how close to the target you are - this allows you to then work out new ways to sell more products if you are not meeting your targets, you can solve the problem before you get to it by always being one step ahead. You can also work out how much money it would cost you to run your business, and ensure that your business is capable of making enough money to cover your expenses - if not then you have to find new income sources or the business just won't work.

* SWOT Analysis - SWOT stands for Strengths, Weaknesses, Opportunities and Threats - so by using a SWOT Analysis you can be one step ahead and work out your weaknesses so that you can try to improve on them. You can also work out where your business can make opportunities, such as if you are selling winter coats and the winter is bitterly cold, you are more likely to get an increase of sales. Working out your threats enables you to try and eliminate or minimise any potential threats to your business before they become an issue.

* Setting Goals - by setting goals for the business you can use the business plan to allocate dates that these goals should be met by and then keep a review to see if they have been met, or if they haven't - why they haven't been met. Using a business plan helps you to stay organised and you can keep a review on the progress of your business.

* Marketing Strategy - having a marketing strategy allows you to work out where you are most likely going to advertise, who your target market is going to be, how much you will allocate to your advertising budget, if you are going to have a website and you can also keep track of if your sales improved after a marketing campaign - if they didn't then the campaign wasn't a success and should be altered before trying it again.

Overall the business plan allows you to stay one step ahead and always know what is going to happen in the next few months. It allows you to predict sales, set and review goals, as well as working out where your business may fail (your weaknesses). Having a business plan is like having a road map - it tells you where you should be throughout the year. Using a business plan also allows you to plan ahead which can stop many surprises, such as making a loss or not meeting your targets - you can plan for these events and try to find an alternate route to ensure that you stay on track.

Learn more about this author, Natalie M. Wolverson.
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