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Do
I need a business plan?
The best way to show bankers, venture capitalists, and angel
investors that you are worthy of financial support is to show them a
great business plan. Make sure that your plan is clear, focused and
realistic. Then show them that you have the tools, talent and team
to make it happen. Your business plan is like your calling card, it
will get you in the door where you'll have to convince investors and
loan officers that you can put your plan into action.
Once
you have raised the money to start or expand your business, your
plan will serve as a road map for your business. It is not a static
document that you write once and put away. You will reference it
often, making sure you stay focused and on track, and meet
milestones. It will change and develop as your business evolves.
Not
everyone who starts and runs a business begins with a business plan,
but it certainly helps to have one. If you are seeking funding from
a venture capitalist, you will certainly need a comprehensive
business plan that is well thought out and contains sound business
reasoning.
If
you are approaching a banker for a loan for a start-up business,
your loan officer may suggest a Small Business Administration (SBA)
loan, which will require a business plan. If you have an existing
business and are approaching a bank for capital to expand the
business, they often will not require a business plan, but they may
look more favorably on your application if you have one.
Reasons
for writing a business plan include:
-
Support
a loan application
-
Raise
equity funding
-
Define
and fix objectives and programs to achieve those objectives
-
Create
regular business review and course correction
-
Define
a new business
-
Define
agreements between partners
-
Set
a value on a business for sale or legal purposes
-
Evaluate
a new product line, promotion, or expansion
What's
in a business plan?
A business plan should prove that your business will generate enough
revenue to cover your expenses and make a satisfactory return for
bankers or investors.
-
Executive
Summary--features the highlights of your plan and sells your
idea in two pages or less.
-
Company
Summary--a factual description of your company, ownership, and
history.
-
Products
(or Services or both)--describes your products and/or services
and how they stand out from competitive products and services.
-
Market
Analysis-provides a summary of your typical customers,
competitive landscape, market size, and expected market growth.
-
Strategy
and Implementation-describes how you will sell your product, how
you will put your plan into action, and establishes milestones.
-
Management
Summary-provides background on the management team, their
experiences, and key accomplishments.
-
Financial
Plan-contains key financials including sales, cash flow, and
profits.
What
makes a successful business plan?
-
A
well thought out idea
-
Clear
and concise writing
-
A
clear and logical structure
-
Illustrates
management's ability to make the business a success
-
Shows
profitability
How
do you write a business plan?
Sitting down looking at a blank computer screen as you prepare to
start your business plan can be daunting. You may want to look at
some alternatives that will make the process a bit easier.
Hire
a Professional
A professional consultant will create the business plan for you, but
you still have to be prepared to think through your business and
understand the underlying concepts in your business idea. You will
have to work closely with the consultant to ensure that he or she
develops a good plan that accurately represents your business or
business idea.
Buy
a Book
There are many good books on the market that will help you to
understand what needs to go into a good business plan. You can read
Timothy Berry's "Hurdle: the Book on Business Planning".
Use
Business Planning Software
A good business planning software package will provide you with an
outline for a well-developed, objective-based and professional
business plan. Software packages will remove the problem of starting
from scratch by structuring your plan for you. The software should
ask you the right questions that will pull out the most important
underlying concepts within your business idea. Find
out more about the leading software package on the market,
Business Plan Pro.
Business
planning resources:
Business
Plan Pro
Marketing
Plan Pro
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