Wednesday, March 21, 2012

Building a Business Plan

Planning, planning and planning. It's all about creating a concrete road to walk into. Here we will know why and how to do establish it.

Why do i need a business plan?

You have probably discovered by now that there is more to starting a business than you first thought. There is so much to learn and gather that it can become quite overwhelming. Have you assessed whether you are an entrepreneur at heart and ready for the challenge? Do you have a good indication of the type of business you want? This next step will test your theories and indicate whether to proceed further.

A business plan is a necessary tool for all businesses. Just as a home is not built without blueprints or a movie made without a script, you don't start a business without a sound and workable blueprint. You now take the information you have gathered and put those ideas formally onto paper.

You will learn how much you need to borrow, whether you can afford to borrow , your break-even point, and whether the business can afford to pay you a satisfactory wage. People often prepare a plan and start crunching numbers,only to discover that their idea needs reworking or is not financially viable. It is better to discover this on paper rather than after you've started.

Where do you find help with business plans?

With the Internet, sample plans can be freely downloaded and used as a reference. Most banks and large accounting companies have publications or media to help you. As well, try the following resources:

*Small Business Administration: Before you start your business plan,make an appointment with your local Small Business Administration center to discuss what type of information your business plan should contain. This will save you a great deal of time and energy and start you in the right direction. They also have loads of resources.Website:

*Entrepreneur Magazine: Everything you need to know about business plans, including articles, sample plans, and loads of links to nationwide resources.Website:

*Center for Business Planning: Offers samples of winning business plans,software, resources, links, and helpful articles.Website:

*Small Business Development Center: Offers nearly thirty industry specific business plans, a virtual business plan tour, software and loads of information.Website:

*Planware: Offers free downloadable business planning software, a 65 page guide, financial and strategic planners and free online advice.Website:

* This site offers over 250 plans, many of them industry specific,and is a mine of information and resources.Website:

Expect to spend anywhere from two weeks to a few months in completing research and putting the plan together, and don't be on a hurry. Some people hire a consultant or accountant to prepare their whole plan, which isn't a good idea, because you need to have answers to all the questions to operate your business successfully, confidently - and to satisfy a lender or investor.

What Is in a "Business Plan"?

Follow a plan format that ensures you research all the important areas of your business, and if it is being used for lending or investment purposes, that you have provided all the information that lenders need.Your first task is to decide why you are preparing this plan. Answer these questions:

  • Why am I preparing this plan?
  • Who else will be reading it?
  • Why will they be reading it?
  • What do they need to know?
Know Your Goals and Objectives, by knowing why you are preparing this plan,you can save time and effort by focusing on the important areas. Business plans often contain filler information that is not pertinent. Look at sample plans from the sites mentioned earlier to get an idea. If you need to borrow funds, ask the lending institution exactly what is required.

The size of the final document will be dependent on the size and complexity of your business and whether you are looking for outside funding.The end result should be professionally presented, with typewritten pages and a table of contents, and securely bound. You should include the following outlines:

1. Executive summary. The executive summary should be no longer than two pages. Prepare it after the plan is complete, as it summarizes the whole plan in a nutshell. Make it dynamic and exciting to generate the reader's interest. Loans officers or investors have read copious plans and tend to skip through them if they get bored.
2. The company. Introduce the business in more detail, outlining your type of business, giving its history (if you are purchasing an existing business) or an outline of the new business's products or services.With an existing business, highlight any recent special achievements.
3. Products and services. Your business is all about selling services or products, so ensure that what you are offering is marketable and profitable.
4. Marketing strategies. Refer to both market research and how you plan to market your business. As marketing is a key component to the success of your business, prepare this section in depth.
5. Operational information. Plan how you will operate your business, from overhead costs to distribution channels.
6. Financial information. The viability of your new venture will culminate when you prepare projections of income, expenses, and cash flow, and when you review how much money you may require. Even if you are not borrowing money, projections and cash flows facilitate making many future decisions.
7. Funding requirements. 
8. Appendix. Include copies of any documents that back up and strengthen the information in your business plan, including:
  • Up-to-date financial statements from the business you are purchasing
  • Personal statements of net worth
  • Letters of reference and letters of intent
  • Product pictures or relevant newspaper articles or websites reviews
  • Resumes of primary employees or key partners
  • Incorporation or business registration papers
  • Cash flow and projection forecasts
  • Permits, licenses, trademarks, or patents
  • Market survey(s)
  • Equipment and asset appraisals
  • Partnership or employee agreements
  • Insurance policies and leases

Always Seek A Professional Advice: Enlist a consultant or accountant's help in compiling the business plan's information into the correct format, and have him or her review it after both the first and final drafts. Putting it all together can be challenging. A bank would prefer to see that you have involved a professional, it helps to validate the contents.


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