Why A Small Business Startup's Business Plan Is A Critical Element Of A Start Up's Success

Sadly, I've seen it all too many times - a business plan for a small business startup ends up sitting on a shelf gathering dust after the businesses gets off the ground. It's really a shame to see this waste of time and effort and it really shouldn't be that way. Worse yet, most start up business plans are put together for financing and totally ignored afterwards.

A start up's business plan should be a critical document in managing the business. Actually, it should be a living document central to the success of the small business. If your plan is not up to the task, then fix it or create a new one that is. Here are some critical elements to a good startup's business plan that will allow it to be a management tool rather than just an inconvenience.

1. A businesses plan should be a realistic predictor of the future of the business. This is particularly true for a business startup.

2. The plan should be based on solid assumptions backed by research not one of these "If 20% of the market buys X products or services from us, then…." The better the research, the better the plan and often the better the business will perform.

3. The plan should be a document that lives with the business and is easily changed to reflect new discoveries in the market, competitors, costs, etc. Updating a business plan with newly discovered data will give you a new picture of what your businesses' results will look like. That way, a) It will be a better base to make decisions from and b) It will allow you to do "what ifs" on various business scenarios.

4. It should be very detailed so minor changes in your business will roll through to both the bottom line in your P&L as well as your Balance Sheet.

5. A good business plan should have a cash flow piece, as lack of cash is the number one reason why businesses fail. As a matter of fact, many businesses that fail were making money. But no matter how much money a business is making, without the cash to pay bills and buy materials, etc, a business is doomed.

If you are in the process of starting a new business, make sure your business plan is a critical part of your startup process as well as the years beyond. You will be glad you did.

Ron Stone is a lifestyle and financial professional. Among his companies is an insurance agency specializing in group insurance for small businesses and in particular trucking companies. Learn more at his websites, Truckers Insurance and Small Business Health Insurance