Business Plan Basics
Courtesy of Palo Alto Software, Inc.
The best way to show bankers, venture capitalists, and angelinvestors that you are worthy of financial support is to showthem a great business plan. Make sure that your plan is clear,focused and realistic. Then show them that you have the tools,talent and team to make it happen. Your business plan is likeyour calling card, it will get you in the door where you'll haveto convince investors and loan officers that you can put yourplan into action.
Once you have raised the money to start or expand your business,your plan will serve as a road map for your business. It is nota static document that you write once and put away. You willreference it often, making sure you stay focused and on track,and meet milestones. It will change and develop as your businessevolves.
Do I need a business plan?
Not everyone who starts and runs a business begins with abusiness plan, but it certainly helps to have one. If you areseeking funding from a venture capitalist, you will certainlyneed a comprehensive business plan that is well thought out andcontains sound business reasoning.
If you are approaching a banker for a loan for a start-upbusiness, your loan officer may suggest a Small BusinessAdministration (SBA) loan, which will require a business plan. If you have an existing business and are approaching a bank forcapital to expand the business, they often will not require abusiness plan, but they may look more favorably on yourapplication 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 thoseobjectives
- 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 satisfactoryreturn for bankers or investors.
- Executive Summary--features the highlights of your plan andsells your idea in two pages or less.
- Company Summary--a factual description of your company,ownership, and history.
- Products (or Services or both)--describes your productsand/or services and how they stand out from competitive productsand services.
- Market Analysis-provides a summary of your typical customers,competitive landscape, market size, and expected marketgrowth.
- Strategy and Implementation-describes how you will sell yourproduct, how you will put your plan into action, and establishesmilestones.
- Management Summary-provides background on the managementteam, their experiences, and key accomplishments.
- Financial Plan-contains key financials including sales, cashflow, 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 asuccess
- Shows profitability
How do you write a business plan?
Sitting down looking at a blank computer screen as you prepare tostart your business plan can be daunting. You may want to lookat some alternatives that will make the process a bit easier.
Use Business Planning Software
A good business planning software package will provide you withan outline for a well-developed, objective-based and professionalbusiness plan. Software packages will remove the problem ofstarting from scratch by structuring your plan for you. Thesoftware should ask you the right questions that will pull outthe most important underlying concepts within your business idea.Find out more about the leading software package on the market, Business Plan Pro.
Buy a Book
There are many good books on the market that will help you tounderstand what needs to go into a good business plan. You canread Tim Berry's newest book, "The Plan-As-You-Go Business Plan".
Sample Business Plans
Bplans.com has 100+ free sample plans to help guide you through your "writers block". The sample plans available are in all types of categories from construction to retail, consulting to online businesses.
Hire a Professional
A professional consultant will create the business plan for you,but you still have to be prepared to think through your businessand understand the underlying concepts in your business idea.You will have to work closely with the consultant to ensure thathe or she develops a good plan that accurately represents yourbusiness or business idea.
Business planning resources
Source: bplans.com
Here are some of Palo Alto Software's business planning resources:
- Business Plan Pro - Create professional business plans in hours, not weeks. Step by step quidance and instant downloads available.
- Marketing Plan Pro - Detailed marketing plans are essential to any business. Create yours today with Marketing Plan Pro!.
- Sample Business Plans - Browse 500+ sample business plans. Each sample plan is included in Business Plan Pro.Business Planning Books - Read books on creating a business plan, and keeping that plan alive. Included is Tim Berry's newest book "The Plan-As-You-Go Business Plan" and others.