The once requisite business plan may no longer be required by banks and lending institutions for small companies, but experts say entrepreneurs would still benefit by preparing the plans.

Business plans generally aren't necessary if you are forming a small, home-based business needing little cash; have large amounts of collateral to protect the loan; or have an existing business with a track record and are seeking an expansion loan, bankers say.

"A lending agency is a business. With many business loans, they are going to base their decision on the borrower's collateral, whether it's home equity or some other sources," said Diane Sandstrom, consulting manager at Duquesne University's Chrysler Corporation Small Business Development Center. "When there's lots of collateral, they really don't care about the business plan. If the business fails, they'll have the collateral as a backup.

"Banks will say, 'Give us a one page summary on what you intend to do,' and they will also do a thorough background check and the normal things that are done for any business loan, such as your credit score, credit worthiness, net worth and other factors."

Even so, there are many reasons business plans are still worthy documents for small-business owners.

The primary value of a business plan is that it allows the writer and the financial institution to evaluate the business venture for optimum economic viability.

"While the business plan has several targets included that allows a bank to see how reliable you are, the business plan also is written for yourself," said Walt Becker of the Service Corps of Retired Executives, a nonprofit organization that provides small-business advice and training. "It forces you to be disciplined. It forces you to consider and reconsider everything you said at the beginning."

A business plan defines your business and identifies its objectives. If it's done well, it will help business owners uncover any weaknesses or errors in their planning process.

What should be in a business plan?

First, put your basic business concept in your plan, and back up it up with data that justifies the feasibility of your company and the specifics of your concept. Include detailed costs of your business, and how you expect to cover them.

Make sure you include monthly one-year cash flow projections, and be very specific on how you intend to handle any unexpected money problems and other difficulties should they arise.

You'll also want to include detailed information about your intended market, and any projections you might have for the success of your venture in that market and the challenges you face from competition.

Explain how you plan to reach your market through advertising, a Web site or other means.

Another portion should describe how your previous work experience will be beneficial for your new company. Include resumes for all your staff people as well, and include job descriptions for each individual.

But perhaps above all, make sure that your plan is well-written and easy to read. Run-on sentences, misspellings, grammatical issues and other writing woes will defeat all your hard work in a flash, the experts say.