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Every business needs a good business plan. It's one of the first things they teach you in business school. One of the big misconceptions is that the purpose of the business plan is to get financing. It is that, but it's so much more. A good business plan is one of the best management tools business leaders have at their disposal.

Use It For Financing

You business plan is like a resume for your business. It should present your business idea to potential investors, and show how you plan to be profitable with your idea. Your business plan should give a picture of how your business will operate. It should show how you will capitalize on strengths, and overcome your weaknesses.

Have your business plan bound. It should look like a finished, professional document, not something that was thrown together at the last minute. If you want people to take your plan seriously, you need to present it that way.

Your business plan should not be a mass mailing piece. You should be selective about who you let see your plan. You put a lot of time and effort into the plan, and there is a lot of valuable information abut your business. Don't just give that information away. While most serious investors would not steal your ideas, there are always some who will take advantage of you if given the opportunity.

Use It As A Road Map For Your Business

A downfall of many new business owners is in thinking that once they've gotten financing for their business, the business plans job is done. Nothing could be further from the truth.

Earlier I mentioned that a business plan is a valuable management tool. You spent a great deal of time and effort defining your business, setting goals, and establishing financial expectations. You examined the competition and did your SWOT analysis, and gathered tons of valuable information. Now that you have financing and your business is a reality, that information is critical to your ongoing success.

The information in your business plan will help guide your decisions, and will help you evaluate your progress. Use it the information as benchmarks to compare against. It will help you better evaluate which decisions meet your goals and vision.

Remember, a business plan is a dynamic document. It is not set in stone. Once your business is operating you may find areas that aren't performing like you predicted, or the business environment may have changed. When that happens, you need to be able to make changes to the BP that better reflect the way your business operates. This self-appraisal is valuable in helping you see areas that need to be readjusted to keep you business operating at it's best.

You business plan is not a one-time tool. It is meant to be used on an ongoing basis. Not using it beyond the financing stage gives your competitive advantage back to your competition.

Learn more about this author, Jim Smoot.
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