The first time many folks hear about a business plan is when an investor or lender asks them to create one in order to receive funding for their venture.

This process of articulating your vision in precise descriptive terms and then quantifying it in a budget is incredibly valuable. It is a model or blueprint of your proposed venture that you can test to identify and manage risks, avoid costly mistakes and show it to advisors, stakeholders and investors.

Business plans include several different elements. The four essential parts of a business plan are: the company description, marketing, financials and management section.

The company description is the basic overview of what the business will do. This section may also include information about the company’s legal structure, goals, objectives and the mission statement.

The marketing section is broken down into two sections: marketing analysis and a marketing strategy. A thorough market analysis is critical to prove to your lender that there is a feasible market. This section includes research on your potential market niche, competition, and specifics on your target market. This research will build the case for your product or service desirability.

The market strategy uses your analysis to show how you will reach and retain your clients.

The “Four Ps,” product, price, place and promotion, make up your marketing mix. These are the elements that determine how you develop your product for your target market, how you position the price of your product or service, how you distribute to your customers and how you promote your business.

 The financial section will include detailed financial reports that translate the narrative sections of the plan into the language of numbers.

This will provide a standard for you and your investors to judge your progress towards your business goals. It will include one-time startup costs, how you price, and financial projections or your profit and loss statement. This information should clearly describe when the business will be profitable and how the debt will be repaid.

This section is closely scrutinized by investors and is extremely useful in setting milestones to help the business stay on track.

The fourth essential section of a business plan is the management plan. Experience and expertise in the product or services being offered, management, accounting and marketing are critical to business success. This section describes how you, your management team, and other experts —like your accountant — fulfill the needs of your business.

A business plan provides this framework to constantly refine your mission, your market and your goals. It is your roadmap or GPS tool to get you and your business where you want to go.

It should be a living document to update and refine as your company evolves. Many business owners engage in the elements of business planning, but it is often in a haphazard, reactive fashion. A business plan provides a place where these elements of business planning come together in a useful and practical way.

Napa Valley College Small Business Development Center offers business owners and entrepreneur’s assistance to get their business plans completed.

For more information on our counseling or workshops call 253-3210.