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How to Write a
Great Business Plan
What's the best way to show that you
are worthy of financial support? Show banks, VC's and independent
investors a great business plan. It will open the door but you'll have
to convince investors and loan officers that you can put your plan into
action.
Not only can a good
business plan start or expand your business, it can also serve as a road
map for your business. Reference it often and make sure you stay focused
and on track, so your goals can be met. It should change and develop as
your business evolves.
Do I need a business
plan?
Not everyone who starts and runs a business begins with a business plan,
but it certainly helps to have one. Whether or not you receive funding
from a venture capitalist, you will certainly be better off with 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. You can find a list of business planning consultants at
www.planconsultants.com.
-
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".
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