Do I really need to make a business plan?

One survey found that putting together a business plan nearly doubles the odds that a company will be successful or secure investment capital.

Launching a new business in New York involves countless steps. Aside from having a good idea, entrepreneurs are facing financial decisions, logistics, management matters and, of course, the actual work.

Much of this is often outlined in a business plan, which should be drawn up before just about anything else is done. Some people mistakenly skip over this step. Word to the wise: Drafting a business plan is the first step to success.

Data supports business planning

There are numbers to actually support the reasons why business owners should create a plan. According to Small Business Trends, a 2010 survey from Palo Alto Software found that companies that had a plan in place were almost two times as likely to be able to either obtain capital or grow their business.

Other findings from the survey about business owners who drafted a plan note include the following:

  • 36 percent secured a loan, as opposed to just 18 percent of the people who did not have a plan
  • 64 percent grew operations, as opposed to just 43 percent of the people without a plan
  • 36 percent obtained investment capital, as opposed to 18 percent of the people without a plan

Even without the data, it should go without saying that putting together a business plan is a good way to organize thoughts and have something tangible to give to potential investors. Additionally, it gives owners a chance to make key determinations, such as how partners would resolve a business dispute.

What is in a business plan?

The U.S. Small Business Administration says a business plan should project as far as three to five years ahead. That being said, one of the most important elements of any plan is the financials. For businesses that are already established, this means including as much historical data as possible regarding cash flow and balance sheets. For new businesses, owners should include information regarding projections about where the company will be in the years to come.

A business plan should also include a market analysis. Potential investors are interested in seeing how the company compares to competitors as well as how the goods or services will be marketed. This also helps owners put together their thoughts on a sales strategy and how to propel their brand.

Information regarding the company's management and structure is also included, such as whether the business is a partnership or corporation. And, of course, the plan should detail the actual good or service that is being sold.

Forming a business is an exciting time, but many important decisions lie ahead. Anyone who has questions about this topic should speak with a commercial attorney in New York.