Business
Planning: Do I really need to do it?
WHY 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.
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. 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 Association (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".
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.
BUSINESS PLANNING RESOURCES
You can find more information about business planning along with 30 sample business plans
at www.bplans.com. The site also
includes free planning tools including a miniplan that allows you to write a synopsis of
your business idea, a starting costs calculator and links to research resources. |
