If you are embarking on a long trip most would take a map. If you are
starting a business you need a map as well. The map is called a business
plan. Business plans are of great importance. This business plan will lay
out your business and how you plan on making money. They cover the full
spectrum of the business from production of the good or service to it
marketing and even the financing of the firm. 
The Business Plan will include pro forma financial statements, which are
projections. It will include your target market, the costs involved in
meeting customers' needs, a background of the management, and potential
problems. 
Making a business plan is generally not well liked by entrepreneurs.
(Think about it...right in the middle of the excitement of launching a new
company when you have a million other things you want to do, you have to
sit down and write a long paper.--sounds fun right!!) Well liked or not,
it has to be done. 

Why must it be done? Business plans serve as a road map for the future. As
such, many problems can be foreseen and hopefully avoided. (Continuing
with the road map analogy, wouldn't you stop for gas if you see the next
place with gas is 200 miles down the road?). 

If the avoidance of problems and the discovery of possible opportunities
does not convince you to do a business plan, think of it this way: lenders
and equity investors will likely demand a business plan anyway, so you
might as well get it out of the way early on in the process and start with
one. 

There is no single way to do a business plan, but the majority of plans
have mainly the same topics: 
* An executive summary/introduction that lays out a quick overview of what
the company will do and why investors should invest. 
* The business current market conditions facing the company including
opportunities, threats, competition. 
* The management team in place and their experience. (Remember in
start-ups people are often investing more in the management than in the
company itself.) 
* Pro Forma financial statements. These are you looking into your crystal
ball and showing what future financial statements (income statements,
balance sheets, and cash flow statements) will look like. This is often
the most difficult step and many assumptions must be made. 
* A statement explaining what your financing needs are and how you will be
using the money. 
*A section showing financial ratios and expected returns provided the
financing is arranged. 

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