by Jonte Rhodes

Created on: September 22, 2007

A business plan is a very effective tool to having a successful business because it serves so many purposes and different aspects of the business. And it also gives you a constant reference source as to how well each part of the business is doing at any given time. It also helps in starting up a business of any kind, and can be used in formulating long term business goals and objectives for employees to achieve. It is really a way for you to convey all your ideas about your business to others in terms that can be assessed and measured.

Not all people starting new businesses do have business plans however, and it is not always essential to produce an in depth plan for your business to succeed. If you are starting for example a sole trading business. That is to say that you are the only person running and working for the business. Then a full business plan isn't always needed as it might be with the foundation of a new multi-national corporation for example.

Even basic business plans will usually contain fore casted figures of profit and expenditure, as well as any possible expansion plans, your break even point and what you want to achieve with the business. It should also contain useful market research, both primary and secondary, assessing competition and market trends of your product. It can also be used as a log of raised capital and of course is always useful in securing that capital in the first place.

The market research should take in the location of your business and from this how much demand you are likely going to have for your product. For example if you are a new business setting up on the edge of town, but there is a rival company in the town center already, then they will likely be a lot more busy than you. Unless you have distinct differences between what you are offering then a lot of consumers will choose convenience rather then loyalty or even better service.

Also you will need to assess the level of competition there is nearby, and how your business compares to them. For example are you offering something that they aren't, such as new products or better prices. It is also prudent to assess the competitions business in terms of how much money they are making. Setting up a new business to compete in a struggling market where there is already only one trader in the same market segment isn't a good idea.

Determining whether you will have a direct or indirect competitor early on is important as well. This meaning whether another business selling the

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