A good business plan has two goals: It should describe the fundamentals of your business idea and provide financial data to show that you will make good money. Beyond that, the content of your business plan depends on whether it's for potential investors or a financial projection just for yourself.
Depending on whether you're trying to attract investors or are creating a blueprint for your own use, a business plan can take somewhat different forms.
If you will use your business plan to borrow money or interest investors, you should carefully design your plan so that it sells your vision to skeptical people. Normally this means your business plan should include:
Together, all the parts of your plan should reveal the beauty of your business idea. You want to show potential lenders, investors, or people you want to work with that you've hit upon a product or service that customers really want. In addition, you should prove that you are exactly the right person to make your fine idea a roaring success.
Because your business plan will be submitted to people you don't know well, the writing should be polished and the format clean and professional. Your numbers must also be accurate and clearly presented. However, not all business people are great writers or mathematicians. Consider paying a freelance writer with small business savvy to help you polish your plan. Similarly, if you are challenged by numbers, find a bookkeeper or accountant to provide needed help.
If you're not looking for outside money, your financial projections will be the most important part of your business plan. These projections will tell you the cost of your products or services, the amount of sales revenue and profit you can anticipate, and, perhaps most importantly, how much you'll have to invest or borrow to get your business off the ground.
Because you won't use your plan to ask for money, you can create an informal business plan that omits some of the elements listed above. For example, you don't need to worry so much about making a sales pitch or a slick presentation, and you may decide to skip the résumé of your own business accomplishments, but think twice before leaving out too much. Any new business will need to introduce itself to people -- for example, suppliers, contractors, employees, and key customers -- and showing them part or all of your business plan can be a great way to do it.
Forecasting the finances of your business may seem intimidating or difficult, but in reality it's not so bad. Good planning consists of making educated guesses as to how much money you'll take in and how much you'll need to spend -- and then using these estimates to calculate whether your business will be profitable. Here are the financial projections you should make:
Again, no matter who your audience is, you should be as thorough as possible when calculating your break-even analysis and profit-and-loss forecast. The last thing you want is to experience the very real misery of starting a business that never had a chance to make a solid profit.
Your best bet is to follow a self-help business plan book that shows you how to conduct the financial forecasts described above. Two good bets are Business Plan Pro, by Palo Alto Software, and How to Write a Business Plan, by Mike McKeever (Nolo).