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Business start-ups may benefit from a business plan

Many people in Minnesota may dream of one day owning their own business. Some will even leave the "rat-race" of their current job to open their own business. One part of business planning that should be completed before the business opens its doors is the creation of a business plan. A well-drafted business plan guides the business as it starts up and serves as a reminder as to how the business should be set up, how it should operate and how it can grow. In addition, investors and partners may want to see a business plan before getting involved in the enterprise.

There are two types of business plans: traditional business plans and lean startup business plans. Traditional business plans are detailed and comprehensive. There are generally nine items a traditional business plan can address (although it is not necessary to include every single item). Traditional business plans can include: an executive summary, a description of the business, a market analysis, a description of how the business will be organized and managed, a description of the business's service or product line, the business's marketing and sales strategy, any requests for funding, financial projections and an appendix.

A lean startup business plan may be appropriate in situations in which the business owner wishes to start running their business as soon as possible, the business is not very complex or if the business owner plans on altering the business plan in the future. There are certain items that can be found in a lean startup business plan. They can include: key partnerships, key activities, key resources, a value proposition, a description of customer relationships, customer segments, channels, cost structure and revenue streams.

Business plans can help a business start off on the right foot. However, it is important that they are drafted in a manner that is not just appropriate for the business, but is also legally sound. There may be regulations that need to be followed or other laws that affect how a business is structured, depending on the type of business being formed. A business plan that addresses the legal aspects of the business can help ensure that the business owner does not experience any delays or extra costs that may follow a breach of any applicable regulations or laws.

Source: U.S. Small Business Administration, "Write your business plan," accessed May 7, 2018

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