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Business Plan Basics
By Palo
Alto Software, Inc.
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
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.
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. Find
out more about the leading software package on the market,
Business Plan Pro.
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Christians
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