Small businesses are struggling in this economy and scrambling to find new ways to generate revenue. One crucial area that they overlook most times, is the development of a business plan. A business plan is like a road map for your business to follow on the road to success. Without a plan your business could suffer substantially from lack of preparation, especially when there are severe changes in the economy.
One purpose of a business plan is to lay out your strategy, goals and methods for achieving your goals. The other critical purpose for preparing a business plan is to secure funding. Funding can be obtained loans or from investors. The key to winning the support of bankers and investors is to write an effective business plan which clearly delineates your future profitability. In the end no one is interested in giving you funding if they cannot get their desired return on investment, therefore, bankers and investors will study every detail of your business plan before the even considered giving you money. If you don’t meet their strict guidelines then they will reject your request. For this reason it is important to prepare a compelling proposal that exemplifies your company’s best.
The following 10 key components can help you in preparing a winning business plan:
– Executive Summary -This component provides a summary of the business plan. It concisely states the the proposal, gives brief analysis of what you are trying to accomplish, gives company background and lists your conclusions. This part of the document gives bankers and investors the hook to continue to read through the rest of your document.
– Company Analysis – This section covers the history, current operations and future of your company. It gives readers an idea of your core competencies.
– Industry Analysis – This section gives readers an idea of your understanding of where your industry is and where it is going and why you have chosen to operate in this specific field. You must use this section to display your intimate understanding because they will quickly turn down an individual who doesn’t know what trends and standards prevail in their own industry.
– Customer Analysis – This section tells prospective investor what you know about how your customers think, how they buy, what they buy, when they buy and why they buy. This is critical to convincing your readers that you know how to draw customers on a consistent basis, in increased numbers.
– Competitive Analysis – This section shows how much research you have done on your competition. It is important to lenders and investors that you know what the competitive trends are, how much you understand them and what differentiates you from you competition.
– Marketing Plan – This section outlines what approach you will take to getting the word out about your products or services to your target market. It lays out what advertising, sales and promotional tools you will use in your business. It also indicates how often you will implement these strategies.
– Operations Plan – This section outlines how you run your business on a day-to-day basis, who you employ to handle the associated tasks, and how effectively this process is managed.
– Management Plan – This section your management team and the strategies that they use to make the business operate profitably.
– Financial Plan – This section includes your financial statements. They are Income & Expense Statement (Profit & Loss Statement), which shows how much you earned and how much you spent over a specific period of time. Balance Sheet, which shows how much you own and what you owe ate a specific point in time.
– Appendix – Additional documents are usually added in this are that specific lenders or investors may require, such as, licenses, certifications, registrations, Articles of Incorporation, LLC (Limited Liability Company) designations and other documents.
Much success to you in preparing your business plan.
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