A well thought-out and written business plan is essential for a successful business. Basically, it describes the goals of the business and the strategies of how to reach those goals. It should provide a blueprint of marketing and financial plans and give detailed information of where a business is going and how it plans to get there. Writing a business plan can make the process of starting a new business much easier. A plan for your business is like a map of a business. It sets objectives and priorities.
A good plan may also be needed when applying for a loan to start a business or for investment capital to expand a business. Most lenders require such a plan to even consider giving a loan to a business. Based on the information in the plan, the lender will understand if the business is likely to succeed. Lenders are more likely to give a loan to a business with a well-thought-out plan, because it will appear to be a less risky investment than a business with one that is incomplete or sloppy.
A good business plan should include the following information:
- An executive summary is considered very important, because after reading it, the lender should be attracted to the business. It should give an overview of the whole plan including services or products, personnel, the amount of money needed and the way it will be used. If the executive summary isn't succinct, full of energy and enthusiasm for the business, the rest of the plan may never be seen.
- The table of contents outlines each part of the plan and appendices.
- The description of the company, if it already exists, is next. Any impressive facts or achievements should be stated here as well as past profits and financial information. It should conclude with a forward-looking tone and exciting projects planned for the future.
- The product or service should be explained in simple language. It should not be in jargon or acronyms that may confuse the venture capitalist or other person interested in the business. They know finances, but they may not know the particular product or service.
- The marketing segment should be impressive. It should include an analysis of the market with distribution channels and applicable laws. It should give any marketing data available. This is especially important for a lender, because it shows them that the people requesting the loan know their prospective market. They can trust their money to this company. A plan of how the market can be exploited should also be included. This should have a lot of details along with several different strategies.
- The financial section should show the numbers and should be done by a professional. Graphs and flow charts can be used in the appendices if appropriate. There should be minimum cost projection for the next year which includes start-up costs if it is a new business as well as a profit-loss analysis and projected sales numbers.
- The management section showcases the team of managers. Any degrees or other business successes should be stated, because lenders are happier to loan money to a team of managers who have already run a successful business. When writing a business plan, a person with excellent credentials can be listed as an advisor or even put on the board.
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