5 Reasons You Need a Business Plan for Long-Term Success, buy a business plan.

If you plan to approach a financial institution for a loan, apply for a small business grant, pitch your business idea to investors, or enlist the support of a business partner, a business plan is required.

There are some sections in a traditional business plan that you simply cannot complete if you are on the fence, undecided, or not fully committed to a certain point. Business plans help you eliminate the gray area because you have to write specific information down in black and white. Making tough decisions is often one of the hardest and most useful parts of writing a business plan.

So why not arm yourself with one of the best tools a small business owner can have? If you're still on the fence, consider these five reasons you should write a business plan before doing anything else in your small business.

For example, if you have not decided on exactly what products you will sell at what price points, it will be very difficult for you to complete the Products and Services Section of your business plan. Identifying this and other vital information is a valuable end product of the business planning process.

1. A Business Plan Is Simply a Must-Have for Some Businesses

Entrepreneurs who are starting a new business often wonder, "Do I really need a business plan? Is writing a business plan really the best use of my time?" The answer to these questions is almost always, "Yes." A business plan is an integral part of starting a new business.

Some also argue that taking the time required to create a business plan can stifle the startup process and cost precious opportunities for a small business.

Keep in mind that if you are using your plan as a true business planning tool, you don't have to wait until you have all of the answers to get started. You can create an outline of your plan now, filling in all of the information you have at this point, and then work on the blanks as you learn more about the market. This type of fluid and flexible document can be invaluable to a new business.

If you do have such a plan provided by the sellers, proceed with caution. Assume the seller’s plan was developed to sell the business, not to manage the business, and may be too optimistic.

You should always have financial information. Normally you’ll have past financial statements, and copies of tax forms, at the very least—few transactions take place without some basic financial information.

Question the assumptions. At every point that you possibly can, compare the seller’s plan for the business with its past financial information, market data from objective sources, and whatever other reality checks you can find.

Question the information sources: copies of tax forms, if they are real, show what the sellers have told the government. Do they match the financial statements coming from the accounting? How reliable are the financial statements? Have they been audited by outside accountants? Is the seller willing to allow an audit?

Use this financial information as a basis of comparison

Are you considering purchasing an existing business? You’ll want to go in well-informed and well-prepared.

Start with the information you get from previous owners. Ideally, during the purchasing process, you received a business plan from the previous owners.

The main difference between the two options is the existence in the plan of either a startup table, or a past performance table. In a new business, a startup table establishes opening balances for starting expenses, and financial balances including initial capital, debt, and assets. For an existing business, a past performance table shows past history of profit or loss, and balances of capital, debt, and assets.

The easiest way to simplify the work of writing a business plan is to start with a business plan template.

Once you’ve done the strategic work, it’s time to put it into action and write your plan. Download the business plan template, and review our guide on writing a business plan for additional information.

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You’re already investing time and energy in planning your small business—there’s no need to reinvent the wheel when it comes to formatting your plan. Instead, to help build a complete and effective plan, lean on time-tested structures created by entrepreneurs and startups who have come before you.

Free: Business Plan Template

Our fictional business creates custom greeting cards with your pet’s paw prints on them, and the founder of the business is writing a plan to help understand the market, as well as the logistics and costs involved, to give themselves the best chance of success before they launch.

A business plan can be as informal or formal as your situation calls for, but even if you’re a fan of the back-of-the-napkin approach to planning, there are some key benefits to starting your plan from an existing outline or template.

We’ve filled out a sample business plan as a companion to our template, featuring a fictional ecommerce business. We’ve noted where—and how—an entrepreneur could add more details to expand on their plans, depending on their goals.

The U.S. Small Business Administration (SBA) has one of the best business plan templates available, and it is very thorough — which you would expect from one of the most trusted and respected small business resources.

• Outline the problem and your proposed solution
• Share facts and figures about your target market
• Describe your product
• Outline your business model
• Illustrate the competitive landscape and your place in it
• Propose a timeline and product roadmap
• Introduce your team
• Detail financial requirements

“You don’t have to go overboard with an over-the-top design, but it’s very important to at the very least incorporate your company’s branding into your business plan. This little extra effort can go a long way, giving you a much more professional presentatioN.”

This presentation template also includes Designer Pro Tips that will help you add a new photo to the background and customize chart data for better visualization. You’ll also get two slides with supplemental charts.

1. U.S. Small Business Administration business plan builder

Whether you are pitching investors for a funding round, applying for a traditional small business loan, or self-funding, you need a rock-solid business plan to lay out your vision and map out the steps required to create a successful business.

So if you’re ready to get serious about your business and learn about what to include in a business plan, then keep reading.

Many entrepreneurs don’t know where to start when it comes to creating a business plan, which is why a template is a great option. They offer structure and guidance, while remaining 100-percent customizable. With the help of some small business owners, I have put together a list of the best business plan templates available to download.

You may find that said traditional lending institutions are friendlier than usual, as financing an established business is generally considered to be less risky than financing a startup.

If you're having trouble feeling confident about what the business you want to buy is actually worth, seek advice and valuation help from a professional business appraiser.

Find out what you should actually pay for the business. When you're buying a used car, this is a simple matter of comparison shopping, but business valuation is considerably more complicated. It's common to use a few different methods of business valuation to arrive at a price. This provides a way to come at the value from different angles and typically results in a range of value, rather than one set figure.

If the company uses an outside accountant, documents should accompany the financial statements that will explain the depth of the accountant's review. An Auditor's Report certifies that a full review has been conducted, while a Review Engagement Report will present the findings of a limited review of the business. A Notice to Reader signifies that the accountant prepared the financial statements based on information provided by the business without conducting any checks.

Make an Offer

You may also want to consider asking the seller to finance part of your purchase of the business. One common arrangement is for the seller to carry a promissory note for part of the purchase price. (Note that if you're going to approach the seller for financing, you have to make the option attractive to them. You may need to offer a rate of interest above the going rate, for instance.)

Discover the true reason(s) the business is for sale by talking to people who are familiar with the history of the business you're thinking of buying, such as local realtors, other business people, the local chamber of commerce, and suppliers.

Don't be surprised if you're asked to accompany your offer to buy a business with a non-refundable deposit

If you know what to look for and how to buy a small business, buying an existing operation can be a great opportunity to step into the company without having to start from scratch. If you buy a turnkey operation, you can skip the startup phase entirely and begin operations as soon as the sale is complete