Why prepare a business plan?

Your business plan is going to be useful in a number of ways. Here are some of the reasons not to skip this valuable tool:
First and foremost, it will define and focus your objective using appropriate information and analysis.
You can use it as a selling tool in dealing with important relationships (lenders, investors, and banks).
You can use the plan to solicit opinions and advice from people, including those in your intended field of business, who will freely give you invaluable advice. Too often, entrepreneurs forge ahead without the benefit of input from experts who could save them a great deal of wear and tear.
Your business plan can uncover omissions and/or weaknesses in your planning process.

What to avoid in your business plan?
Place some reasonable limits on long-term, future projections. Long-term means over one year. Better to stick with short-term objectives and modify the plan as your business progresses. Too often, long-range planning becomes meaningless because the reality of your business can be different from your initial concept.
Avoid optimism. In fact, to offset optimism, be extremely conservative in predicting capital requirements, timelines, sales, and profits. Few business plans correctly anticipate how much money and time will be required.
Do not ignore spelling out what your strategies will be in the event of business adversities.
Use simple language in explaining the issues. Make it easy to read and understand.
Do not depend entirely on the uniqueness of your business or even a patented invention. Success comes to those who start businesses with great economics and not necessarily great inventions.

Business plan format: A systematic assessment of all the factors critical to your business purpose and goals.

Here are some suggested topics you can tailor into your plan:
A vision statement. This will be a concise outline of what your business purpose and goals will be.
The people. By far the most important ingredient for your success will be yourself. Focus on how your prior experiences will be applicable to your new business. Prepare a resume of yourself and one for each person who will be involved with you in starting the business. Be factual and avoid hype. This part of your business plan will be read very carefully by those with whom you will be having relationships, including lenders, investors and vendors. Templates for preparing resumes are available in your library, bookstores and the Internet under “resumes.”
However, you cannot be someone that you are not. If you lack the ability to perform a key function, include this in your business plan. For example, if you lack the ability to train staff, include an explanation how you will compensate for this deficiency. You could add a partner to your plan or plan to hire key people who will provide skills you do not have. Include biographies of all your intended management.
Your business profile. Define and describe your intended business and exactly how you plan to go about it. Try to stay focused on the specialized market you intend to serve.
Economic assessment. Provide a complete assessment of the economic environment in which your business will become a part. Explain how your business will be appropriate for the regulatory agencies and demographics with which you will be dealing. If appropriate, provide demographic studies and traffic flow data normally available from local planning departments.
Cash flow assessment. Include a one-year cash flow that will incorporate your capital requirements. Include your assessment of what could go wrong and how you would plan to handle problems. Include your marketing plan and expansion plans and refer to helpful government websites such as the Small Business Administration.