The would-be entrepreneur's handbook

Yes, you absolutely need a business plan. No, it doesn't need to be an elaborate, spreadsheet-laden professional document (unless you expect to apply for a bank loan). The value of a plan is in the planning - it forces you to research all the vital elements of a successful business and put your assumptions to the test.

There are countless books and computer programs to help you through this step. Among the better ones: Business Plan Pro software ($100 standard, bplans.com) and"The One Page Business Plan for the Creative Entrepreneur" ($35 for the book and the CD, onepagebusinessplan.com). At a minimum, your plan should include:

1. Company description:What is your product or service? What is your expertise?

2. Market analysis: Who - and how big - is your target audience? Who are your competitors? What edge do you have over them? How will you get their customers to switch allegiance to you?

3. Price analysis: What are your production costs? What does your research show about what customers are willing to pay? Can you sell enough at that price to give you a sufficient profit margin?

4. Marketing plan: How will you reach customers? How much will it cost?

5. Funding and financials: How much funding do you need to get started? (Use the calculator at bplans.com to estimate this.) How will you use it? What are you projecting in terms of sales for the first few years? How much profit will that give you?

NEXT: Step 6: Pick your advisers carefully