The number of business ideas scratched out on napkins or filling the pages of would-be- entrepreneurs’ notebooks is surely vast. Still, even though many people have ideas for businesses, only a select few manage to create something profitable.

The logical step after the napkin is developing a formal business plan, but many people often stop at creating a simple outline when they can and should do so much more.

A good business plan lays out the strategy and budget that can effectively transform an idea into a real-life, money-making reality. It’s the foundation you can build on and the roadmap you can follow to your goals.

The process of creating a business plan helps you nail down details like budgeting and market planning without losing sight of big-picture operations and objectives. Proper planning can also make for a smoother startup period and minimize problems you might encounter down the road.

And, of course, your business plan is a significant tool for acquiring funding.

Your Business Plan Should Help You Walk the Walk

When Palo Alto surveyed its Business Plan Pro software users, those who had completed a business plan were almost twice as likely to obtain capital and grow their business as those who did not have a business plan. That’s because anyone who chases money through official channels — bank loans, venture capitalists, or angel investors — will need to point to their plans as proof of potential.

If you have received all the funding you are likely to get from friends and family, pursuing angel investors can be a great next step. But unlike your relatives who will love you even if you fail, angel investors will expect to see evidence that investing in your business will be profitable down the line.

And if you pursue venture capital firms, be prepared for competition; you’ll have to stand out among hundreds of pitches. A well-researched, eye-catching business plan will give you that extra boost.

To create a plan that will catch the interest of investors and do the heavy lifting of convincing them that your business will turn a profit, follow these guidelines:

1. Set S.M.A.R.T. goals.

Your goals should be realistic and unambiguous. The go-to guide for achieving this is to use the S.M.A.R.T. strategy: Make your goals specific, measurable, attainable, realistic, and time-sensitive.

Be sure your core values are clearly established and are actively guiding your goal-setting initiative. Consider what is necessary in your market to ensure revenue will surpass costs. Remember to establish plans for employee recruitment, training, and retention, and be realistic about how you will meet cash flow needs as you grow.

2. Do your (market) research.

Your business model should be guided first and foremost by market research. Whether you conduct this research yourself or analyze data that’s already available, it’s critical that you identify your customers, evaluate your competition, and outline your strategies for beating them out. Any investors worth their salt will be looking for this information in your business plan.

In your analysis, be sure to address issues such as demand, market size, location and average income of your audience, how many competitors are already in the market, and current pricing expectations. As a starting point, the U.S. Small Business Administration has a great list of market research resources.

Show potential investors concrete reasons why you’re confident your strategy will reduce risk or connect with an audience. Whatever you do, don’t replace hard data with guesswork. Use all available resources to base your plans on real data, and zero in on the most critical numbers in any pitches.

3. Create something for the future.

A business plan is a strong starting point, but it’s more than just that. It should be something you can go back to, adding to it and making adjustments as your business matures. This is especially significant in a digital age when things are constantly and quickly evolving.

A good business plan is clear and focused but not too rigid; make sure it has some flexibility so it can adapt to whatever the future holds. The long-term vision is vital to know where you want to be in the coming years, but you must also be responsive to sudden changes in how people want to communicate or what they’re responding to in the short term.

If your business idea has made it beyond the pages of a dusty notebook, don’t let it go to waste. Create a plan that sets up your business well so you can run it effectively and enjoy the success of your dream.