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How to Write a Great Business Plan

What's the best way to show that you are worthy of financial support? Show banks, VC's and independent investors a great business plan. It will open the door but you'll have to convince investors and loan officers that you can put your plan into action. 

Not only can a good business plan start or expand your business, it can also serve as a road map for your business. Reference it often and make sure you stay focused and on track, so your goals can be met. It should 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. Whether or not you receive funding from a venture capitalist, you will certainly be better off with 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. 

  1. Executive Summary--features the highlights of your plan and sells your idea in two pages or less.

  2. Company Summary--a factual description of your company, ownership, and history.

  3. Products (or Services or both)--describes your products and/or services and how they stand out from competitive products and services.

  4. Market Analysis-provides a summary of your typical customers, competitive landscape, market size, and expected market growth.

  5. Strategy and Implementation-describes how you will sell your product, how you will put your plan into action, and establishes milestones.

  6. Management Summary-provides background on the management team, their experiences, and key accomplishments.

  7. 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. You can find a list of business planning consultants at www.planconsultants.com.

  • 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".

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