What is a business plan? How do you write one? What are the components? Why are they so important and do you really have to have one?

It is sad but true, many people go into business destined to fail. There is an old saying that a business did not plan to fail, they failed to plan. This is so important in todays economy with a global recession and many small businesses feeling the shutting of wallets. Many small businesses particularly in the service industry are finding it difficult as people reassess what needs are essential and what is just a luxury.

In the beginning of any business venture it is vital that people conduct a business plan to see if the proposed business is worth while. A good idea does not necessarily translate into a good business idea.

What is amazing is that many people dont bother with a formal business plan, yet the components of a business plan will actually give you vital information into the workings, set up and cost effectiveness of the business prior to commencement.

If you are thing of writing a business plan, it can actually be split into 3 main ideas or departments. From the biggest organization to the smallest all businesses need operations, finance and marketing. That really is as basic as it gets. If you break a business down into these 3 areas and think about each department and what it requires, your business plan can be written quite easily and will be extremely comprehensive.

When you do think about these departments or main components, the questions you may have can become quite extensive and almost endless. This I suppose is the reason so many people do not construct one. The task seems daunting and the endless questions seem too difficult. What you need to remember is the better the business plan, the less likely you are to fail. The reason for this is that when you construct a thorough plan, it means you have thought through your proposed business and highlighted many of the challenges and difficulties and formulated a strategy to assist you deal with things before they become a challenge in the day to day running of the business. This means you are acting proactively rather than reactively, which is the preferred method of operation for any business.

Remember even non profit organizations need a business plan. It is not linked only to profit, but is a vital operation and marketing tool as well. Even non profit organizations need to understand how to run their business and how to generate revenue.

If you are thinking of starting a business or if you have a business no matter how big or small it is wise to invest your time in writing your business plan not only to survive in this tough economic climate and be there for when consumers have more cash in their pockets and are wanting to spend.