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What You Need to Know About Small Business Plans If you are thinking about starting a small business, you most likely already know what a business plan is and have heard that you need one. But do you truly understand the purpose of a business plan? Does it really matter if you have one for your small business? And how can you create a small business plan that is actually useful? The introduction and tips below will lay the groundwork for creating an effective small business plan for your new business. Small Business Plans Explained In it's simplest form, a business plan is a document that outlines the basics about your business, products, and services; the market you are targeting; the goals you have for your business; and how you will achieve those goals. A business plan is one of several important plans you should have when you are starting a business, the others being a marketing plan and a financial plan. Your business plan should pull all three of these plans together, incorporating elements of your marketing plan and your financial plan into a comprehensive document. Think of your business plan as a map or blueprint that will guide your business from the start-up phase through establishment and eventually business growth. Why You Really Do Need a Business Plan There are many reasons why you need a business plan, although these reasons vary by the type of business you are starting and how you intend to use your business plan. But the common thread for all businesses is that a business plan is necessary. After all, how can you get your business launched and thriving without any type of written plan to help you? Some of the reasons you need a small business plan that may apply to you include: A business plan is required if you are going to apply for a bank loan, pitch your business to investors, or bring in a business partner. You won't truly be able to qualify your business idea without understanding your target market, researching the competition, and conducting a feasibility analysis — all parts of a business plan. A good small business plan not only outlines where you are and where you want to be, but also helps you identify the specific actions you need to take to get there. A business plan can provide essential background information on your business, strategy, and culture to employees, including managers and staff, as your business grows. The financial section of your business plan can be the basis of your business budget and a useful tool for managing cash flow on a monthly basis. So, you know you need a business plan. The next question to consider is what type of plan is the best fit for your small business.