Preparing a Business Plan
A good business plan is critical to every business. It is essential in raising debt or equity capital unless you are financing purely on your personal credit. At least as important to you as a business owner, however, is utilizing a written business plan as a blueprint to start, run and grow your business successfully. Keep in mind that the business plan is a living document. It needs to be updated on a regular basis, forcing you to think about new issues facing your business.
A good business plan demonstrates to the reader (Lender, Investor, etc.) that you understand your business – – the potential, the operations and the risks. It must be prepared in a manner that is not only convincing, but is also simple and easy to follow. While there is no standard format for a good business plan, the outline below covers the basics in an organized and logical manner.
I. Executive Summary
A one to two page condensed version of the whole plan. This is the first item the reader should see, but the last item that you prepare.
II. History of the Business
Background on the industry and how your company fits into the industry as a whole. Site trends and statistics. Compare and contrast your plan with others in the industry.
III. Analysis of the Market and Competition
Cite facts and figures. Size of market in total, by region, by market category. Who are the competitors? Are they profitable? Will the market support you and the competition?
IV. Business Description
What do I need to know to understand your business? How long have you been in business? What are your locations? What is your legal form of business? Describe in detail your products and services and what makes them marketable.
V. The Management Team
Who runs the business and what makes them qualified? If non-employees such as accountants or consultants help you run the business, make this fact known.
VI. The Operating Plan
Complete discussion of facilities, staffing and processes.
VII. The Marketing Plan
Describe the customer, the distribution channel, pricing strategies and communication vehicles.
VIII. Discussion of Business Risks
Every business has risks. Communicate your understanding of those risks which might include actions by competitors, regulatory changes, inability to get product to market on time, misunderstanding of customer demand, etc.
IX. Use of Proceeds
Any lender or investor will want to know how you will use their money. Your needs for cash should be detailed as to such items as building/equipment purchase, debt repayment, working capital for funding growth, etc.
X. Financial Statements
Three years balance sheets and income statements if your company has been in business that long. Consider having these prepared by an accounting firm.
XI. Financial Projections
Five years of projected balance sheets, income statements, and cash flows. Be sure to reflect repayment of debt being sought.
For more information contact George: George@GeorgePAnderson.com
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