Over the last 2-3 weeks I have spoken to a few people that think they need a business plan. Some individuals are just starting a business and others want to turn a hobby into a business. I thought it would be good to simply outline what is contained in a business plan.
Before I get started I think it is important that even though it is important to have a plan, not all plans are created equal. I am going to briefly outline a business plan that you may take to a lender to secure funds for your business.
Part 1 – Executive summary
This is your time to pitch your business. It should be brief and answer a problem. It may include a table of contents, company background, market opportunity, competitive advantages, and financial highlights. This should be two to four paragraphs tops. Don’t oversell but state the facts and how you have the answer to the problem.
Part 2 – Business description and structure
This is where you explain why you’re in business or want to start a business and what you’re selling. If you sell products, describe your manufacturing process, availability of materials, how you handle inventory and fulfillment, and other operational details. If you provide services, describe them and their value proposition to customers. Include other details such as who you know, intellectual property or proprietary ideas you may own and the legal structure of your company. Side note: Please ensure you speak with someone that it able to speak with you about business structure (ie. financial accountant or advisor).
Part 3 – Market research and strategies
Identify who is your customer. Your market analysis and research should help you get very narrow. Describe how you are going to connect with your customers. What is your marketing strategy? It would be important to include sales forecasts, deadlines and milestones, advertising, public relations and how you stack up against your competition. If you can’t produce a lot of data analysis, you can provide testimonials from existing customers. Side note: If you are having a difficult time getting data to prove your idea or concept, you may think about hiring someone with experience.
Part 4 – Management and personnel
Provide biographies of your key team players. Explain how their expertise will help you meet business goals. Investors evaluate risk and much of their evaluation centers on your team’s experience and their ability to execute.
Part 5 – Financial documents
This is where you provide the numbers that back up everything you described. Include conservative projections of your profit and loss statements, balance sheet, and your cash flow statements for the next three years. Also provide projections for 6, 12 and 18 months. As just mentioned, ensure they are conservative in nature. Side note: If you have never done a financial statement before please find a financial accountant or someone with experience. It will save you a ton of headaches.
I hope this helps. Give me a shout below if you need some help. I have written my fair share of business plans.
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