While life can be very random and luck plays a large part, one of the best ways of improving your luck, is by making things happen rather than letting them happen - and planning is a key part of the process.

Planning plays an important role in many aspects of our lives.

We draw up plans for our homes, we try to plan a family, and we make plans for holidays.

However, it's surprising how many people go into business, sometimes at great personal expense, with little or no business plan - and that's not smart.

So, what is a business plan?

It is a written statement of what your business involves, where it is heading and how it will get there.

It gives you something to measure the performance of the business by, so that a few years down the track you can see whether or not you are getting what you want from the venture.

Lenders will want to see a business plan if you apply for finance, so it's a good idea to always have one on hand.

Your business plan can be as broad or as detailed as you like, but the two things it needs to have are a description about your business and some financial information.

The business description is especially important if you are trying to attract investors or secure finance, as you will need to convince some potentially sceptical readers that your business is a good one.

At a minimum, this section should include a rundown of what your business does, how the business will be run, the outlook of the industry in which you operate, a description of your market (who your customers are) and a summary of your experience in this industry. In other words, why you think you will succeed.

Financial details are the nuts and bolts part of your business plan.

They will tell you and anyone else reading it whether or not you are going to turn a profit.

And that's critical because the last thing you want is the expense and heartbreak of starting up a business that doesn't stand a chance of making a profit.

When it comes to financial details, there are umpteen variations on what you could include in your business plan, but there are two pieces of information that are essential.

The first is a profit and loss forecast. For this you'll need to estimate your sales and expenses on a month by month basis to determine whether or not you are likely to turn a profit.

Remember to allow for seasonal variations that may affect the business. For example, retail businesses often rate Christmas as their busiest period, while others, like accounting firms, find it is a quiet time.

Next is a cash flow forecast. This is probably more important than the profit and loss statement because even though you may be making a profit on paper, without sufficient cash coming in each month to pay for the following month's stock and wages, your business will be in real trouble.

Writing a business plan might seem a bit daunting but the key is to be realistic when it comes to projections and forecasts.

This is where industry experience can be a big help.

If estimates and figures are not your strong suit, get an accountant to help you.