If you lived in New York City and decided to drive to Los Angeles, would you just jump in your car and start driving, no road map, no GFS, no gas, no money, no clothes? Probably not. And yet that’s what many people do when they decide to start a business, just jump in and go. If you wouldn’t start a cross country trip without a roadmap why would you start a business without a business plan? Successful business planning is the key to a successful business.

A business plan is simply a set of roadmaps to get your business from where you are now to where you want to go. It doesn’t have to be a complicated hundred page document with spreadsheet after spreadsheet of forecasts. A business plan can be a 10 page package including the forecasts.

Looking at where you’ve been is a good way to start off the business planning process. Why did you establish your business, or if it’s brand new, why are you establishing your business? What accomplishments did you achieve, what barriers did you overcome, and what were your stumbling blocks? Answering questions like these gets you to the meat of the plan: the profile of the business.

PROFILE OF THE BUSINESS

Business Model: How your business makes money.

The Product: What is your product, what need in the marketplace does it satisfy, what are the attributes of your product and most importantly, the benefits to your customers?

The Market: Who are your customers, be as specific as possible? What’s the size of the market in dollars of revenues per year and number of sales?

Competitive Environment: Name your competitors. What competitive advantage does your product have? Every product has competitors.

Marketing: How will you reach your customers and let them know of your product?

Management, Operations, Production, and Facilities: This is a general top level description.

Current Ownership: Who owns your company? If you have shareholders who are the shareholders and how much do they each own?

Strengths, Weaknesses, Risks, and Opportunities: Identify your own strengths and weaknesses as they relate to those of your competition.

FINANCIAL SECTION includes your profit and loss statement forecast, cash flow forecast and balance sheet.

Most business owners get all wrapped up in how great their product or service is (and it may very well be fabulous) and forget some of the most important aspects of the business plan: defining the market, the competition and marketing strategies. Don’t let that happen to you.

The business plan isn’t a static document that’s completed once a year and then shelved, or at least it shouldn’t be. The plan should be reviewed every month to see what worked, what didn’t, what’s on track, and what’s behind schedule. It may be trite but that old saying “if you fail to plan then you plan to fail,” has a ring of truth to it.

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This article was contributed by Dee Power, who with Brian Hill is the author of Business Plan Basics, a system to complete a winning business plan.