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Creating an effective business plan

Creating an effective business plan

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The main purpose of a business plan is to communicate the vision of the company so that everyone who gets involved is on the same page. This includes potential partners, investors and vendors.

It is an important element of business formation because it substantiates the initial idea of the business with a concrete plan of action. For both established and new businesses, the business plan sets the path for moving forward. A business plan maps out a company’s route to success, and its audience is often broad. As a formal statement of the company’s goals, it guides strategy and directs decisions and actions of the administrators and managers. Its financial components inform investors and potential investors, influence the allocation of resources and direct cash flow. As the resume of the company, it outlines important information about the operations and goals of the business for personnel, vendors, customers and others. Because of the multi-purpose nature of the document, it has several distinct elements that should be included. 

Primary components of a business plan 

The executive summary is the first and perhaps most important element of the plan that others will see, but should be the last portion of the plan to be written. For established businesses, this one-page preliminary document should include the mission of the company, a brief introduction of the founders and employees, examples of growth, products and services, financial information and future plans. For someone just starting a business, the executive summary should include experience, target market, market analysis and future plans. After the executive summary comes the body of the business plan. This includes a more detailed company description and market analysis, followed by the company’s organizational structure. Next is a description of the services or products offered by the company, including research and intellectual property. Following this are the marketing and sales strategies, and funding request, if the company is seeking investors. The final major section of the business plan has the financial projections for the next three to five years. This section should also include historical financial data from the past three to five years, if applicable. 

Tips for a strong business plan 

Particularly for a person starting a new business, it can seem difficult to develop a business plan that stands out from the crowd without deviating from the model. Guidelines for writing a successful business plan include the following:

  • All writing should be concise without filler or fluff.
  • The plan should present challenges and opportunities honestly.
  • Investors prefer conservative business plans. Examples and illustrations help to demonstrate how the plan is conservative.
  • Concepts may be illustrated well with visual representations, such as graphs and charts.
  • Unique, creative elements grab attention and are good for adding life to the plan, as long as they do not detract from the basic message.

If drafting a business plan that incorporates all of the required elements seems complicated or overwhelming, seeking the help of an Illinois attorney who has experience with regulations and laws pertaining to business in Illinois may simplify the process.

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