A great business plan can only take your business so far, but having the business capital to go along with that business plan can take your business to new heights. It can also be the other way around, as a great plan is the first step in getting the capital you are looking for for your business.
Not planning your business correctly can put your business in the 90% of businesses that fail. Developing a business plan is without a doubt the most important step any business can take if it wants to achieve true success. Potential lenders or investors will use the business plan to determine where your business is headed and how you plan to get there. A well written business plan will help you a lot when you are looking for financing. Both lenders and investors view your business plan differently. The lender is primarily concerned with whether he can repay the loan, and the investor wants to know how far he can take the business to maximize his potential return on investment.
The first part of your business plan, and probably the most important, will be the executive summary. This is where you capture the attention of the lender by providing an overview of your product or service, the market, your niche, management, mission, company structure, amount of financing requested, use of funds, terms proposed and the guarantee offered. . The lender or investor will not discuss your business plan further if you do not capture their attention with the Executive Summary.
The next element you’ll need to include is a narrative, which is also known as an “elevator pitch.” A narrative simply defines what your company does in 20 seconds or less. Include your business story and idea below. The reader needs to know a bit about the history of this idea before investing their money in your business. Try to answer the 5 W here; who, what, when, where, and why, and should be a great help in completing the history section.
A one-sentence mission statement will follow. This is where you talk about what your business is about in one sentence. It’s important not to rush through this mission statement as it gives your company a unique identity, so make sure you do a great job with it. The stage is the next section of your business plan. This is where we look at where you are in the process of obtaining business financing.
The niche market section gives you the opportunity to showcase what niche your business is exploiting. You’ll want to reveal information about what sets you apart from the competition. This part should be very detailed to help lenders and investors learn as much as possible about your business. The next thing to follow in your business plan will be a market research report. In this section, you’ll do research to support your claim that there is a need for your product or service. The financial summary is as follows. In this section, you will include information including what are your gross sales, net income, net worth, etc. must be in years one, two and three. This is just an overview and later in the business plan you will provide more accurate projections.
This will give you a lot of information to start preparing a business financing application. In my next article I’ll cover some of the other aspects of your business plan. For a full version of an excellent guide to business financing, do a Google, Yahoo or MSN search for “Business Financing Workbook”.