The only way that a business can be successful is to have a clear and well thought out plan. It must know where it will get its financing from, how it will bring in an income, what the market demographics consist of and how it intends to grow. This is best captured by writing a business plan.
While a plan can be very helpful for businesses deciding on how they want to develop, in many cases, it is a requirement. For example, lenders and investors usually want to see a business plan before they will even consider how much money they want to commit to it.
Always Perform Market Analysis
The first step that each business should follow is a thorough market analysis of the surrounding area. Businesses will rarely be successful unless they understand the demographic of their market. For those that are geographically bound, it will be crucial to understand the people who live within that locality. For those not so geographically bound, such as online businesses, it is still important to understand the characteristics and preferences of the target customers. This will include the crucial needs of the customers, the purchasing trends, potential competition, the extent of the market share it intends to gain and the regulations it will need to comply with.
Create an Overview
The overview is an important aspect of the business plan and will include two main details:
1. The products or services sold by the company and where they will be sold (online, in-store, through a catalog)
2. The legal form it will take (corporation, sole proprietorship, partnership)
Besides describing the business, the owners must also describe themselves. Investors will want to know who will manage it and what experience or qualifications the management will have. Owners who do not have experience with a certain aspect - such as accounting - will need to explain how they will overcome these limitations.
The business plan must not only explain the products and services that will be distributed, but how they will be distributed. It must also explain how they will reach their customers, how they will distribute products and how they intend to grow. For investors, growth is one of the most important parts, since it will explain how they will profit from their investment.
Write a Knockout Executive Summary
After determining every facet of the business, it will be critical to create an executive summary that includes the company's goals and provides a broad overview. Executive summaries are important because they give investors and lenders the big picture, allowing them to conceptualize the potential profitability. The executive summary also helps investors save time.
The executive summary is the part of the plan that needs the most work because many investors will not read everything.
Making the Financial Request
Since business owners consider writing a business plan so they can request funding, it will also be important to include the specific funding request, which includes the exact amount of money they will need and how much money the may be needed in the future.
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