Every Business Needs a Business Plan: Tips for Writing One for 2022
Wednesday, December 15, 2021
December is the perfect time to review all that the Carlsbad Department of Development does to assist local businesses, startups, and those interested in relocating to Carlsbad, New Mexico, because it is National Write a Business Plan Month. In addition to providing direction, facilitating key introductions, and helping you navigate the process of securing appropriate business licenses, zoning, and incentives, our team has the resources and assistance you need to write a business plan, a key component for success.
What Is a Business Plan?
A business plan precisely defines your business, identifies your goals, and serves as your company’s resume. It shows all interested parties — employees, investors, partners, and yourself — that you are committed to building the business. Creating your plan forces you to think through and select the strategies that will propel your growth including market research to support your plans. The basic components of a business plan include a current and pro forma balance sheet, an income statement, and a cash flow analysis.
Why You Need a Business Plan
A business plan helps you properly allocate resources, handle unforeseen complications, and make good business decisions. A good business plan is a crucial part of any loan application because it provides specific and organized information about your company and how you will repay borrowed money, Additionally, it can be used to inform sales personnel, suppliers, and others about your operations and goals. A business plan is not just for startups. It is a living document that should be updated annually as your company grows and changes.
Components of a Typical Business Plan
The following is a guideline for creating your own business plan. Breaking down the plan into several components and working on it step-by-step can help make drafting it a more manageable task.
- Give a detailed description of the business and its goals
- Discuss the ownership of the business and the legal structure
- List the skills and experience you bring to the business
- Discuss the advantages you and your business have over your competitors
- Discuss the products/ services offered
- Identify the customer demand for your product/ service
- Identify your market, its size, and locations
- Explain how your product/service will be advertised and marketed
- Explain the pricing strategy
- Explain your source and amount of initial equity capital
- Develop a monthly operating budget for the first year
- Develop an expected return on investment, or ROI, and monthly cash flow for the first year
- Provide projected income statements and balance sheets for a two-year period.
- Discuss your breakeven point
- Explain your personal balance sheet and method of compensation
- Discuss who will maintain your accounting records and how they will be kept
- Provide “what if” statements that address alternative approaches to any problem that may develop
- Explain how the business will be managed on a day-to-day basis
- Discuss hiring and personnel procedures
- Discuss insurance, lease, or rent agreements, and issues pertinent to your business
- Account for the equipment necessary to produce your products or services
- Account for production and delivery of products and services
- Summarize your business goals and objectives and express your commitment to the success of your business
Once you have completed your business plan, review it with a colleague or the Carlsbad Department of Development. When you feel comfortable with the content and structure, make an appointment to review and discuss it with your banker. Remember, the business plan is a flexible document that should change as your business grows.
The Carlsbad Department of Development is Here to Assist
For additional assistance with your business plan, you can start with reviewing the “Starting a Business” information and resources on the CDOD website. For further help, contact the Carlsbad DOD at (575) 887-6562 to arrange for a meeting.
To prepare for your meeting, the Small Business Association (SBA) offers a Business Plan Tool that helps simplify the process in eight easy-to-follow steps. To learn more about putting your business plan together, go to the SBA’s online Learning Center and take the self-paced course on How to Write a Business Plan. The course explains the importance of business planning, describes the components of a plan, and provides access to resources and sample plans. Because it can be helpful to read several plans to get a feel for how to kickstart your own, you can explore more free sample plans for specific business categories at www.bplans.com. You can also take a look at the SBA’s Business Planning Guide for more information and to view business plan templates.