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Whether or not you seek financial help with start-up costs, you will need an effective business plan. If you are starting a home-based business, your business plan will help you track your goals. If you seek funding from a lending institution, your business plan is what lenders use to determine if they will lend you money for your business. Unless you expect a windfall, you’ll need a business plan.

The importance of a business plan comes from its function. But first, you must define your business clearly. It will be your roadmap in measuring your success. A well-written business plan should be no more than 40-50 pages. Don’t dazzle with unimportant tidbits. Stick to the facts of your business and summarize what your goals are.

Know Your Competition
You will need to know your competition and do a complete market analysis and lots of research. Knowing your customers is a key element in marketing your product. Who is your competition? How can you differentiate yourself from them?

Create an Executive Summary
This is a condensed version of the larger business plan and is the most important part of your business plan. Your summary should persuade the loan officer/lender in the first couple of pages that your business is a viable investment; otherwise you may be turned down for any financial assistance.

In the first few pages of your summary, you should answer the following questions:

• What kind of company do you have?
• Who are your primary customers?
• What are your short and long-term goals?
• How many employees will you have?
• Who are the managers and what is their experience?
• How much money are you seeking and what will it be used for?

The Importance of a Financial Projection
This section needs to summarize of your financial predictions. Use spreadsheets illustrating how you reached your projections. You'll also require income statements, balance sheets and cash-flow projections.

You will tell a lender how much money you'd need to cover your startup costs. This section could make or break your success. If you're unsure about this part of the summary, find a professional to assist you.

Have an Exit Plan
An effective business plan includes an exit plan for when you want to end your business. This could be based on your revenue growth, voting among officers, how the market reacts to your idea and other deciding factors.

No matter how large or small your business venture will be, an effective business plan is the first key element to your success.

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