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I'm Matt Gavenda with About.com, and today we'll be discussing what is a business plan.

What is a Business Plan?

A business plan is like a road map for your company and a resume to investors. It's essential for planning, not just for securing loans or investments, but also for the directing your company by identifying your goals and the plans for reaching them.

What you include in your business plan depends on your audience. When starting a small business, a plan is very useful for defining and directing your business and essential for securing loans and investments. It defines the keys to success and give market analysis to determine the prudence of pursuing a business in your field.

Business Plans as Decision Making Tools

Business plans are decision making tools. They begin with a mission statement and summary with the key elements of your company. Depending on your goals and audience they should include market information including the service you're offering and the problem it solves for your customers. It should also cover demographics and expectation of growth. They usually include a financial section on income requirements, balance sheets, what you expect to make in the future and break-even analysis among other information.

Market and financial analysis can be intimidating but it shouldn't stop you from making a plan. If you are just starting you should have a basic understanding of these concepts, though it does not need to be as in depth as a business ready for investors and loans. In either case, it's very important to understand the financial concepts you'll need to be successful.

Thanks for watching. For more information visit us online at About.com.
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