Do you have a solid business plan in place?
Writing A Business Plan Can Be Your Key To Financial Success In 2019
A well-written business plan helps business owners get their businesses off the ground and then grow. Your business plan serves as a road map to profitability and should be used as a guide for structuring and operating your business. Further, you should consider your business plan to be a living document that should be referred to periodically. Review benchmarks to see whether you have hit them and to determine if any of the projects you planned out have been completed and successful and which one, if any, never got off the ground.
Business plans are valuable when trying to secure startup or expansion funding. Investors want to be confident that they will see a return on their investment. A business plan is the tool that can help you prove that your company is viable and poised for future growth.
Success often hinges on your business plan’s Executive summary.
This section of the plan informs a potential lender about what your company does and why it will be profitable. It should include the company’s mission statement, a succinct description of your product or service, information about your firm’s leadership team, location, and local market forces. Importantly, you must include financial information, such as owner investment figures and sales projections.
Other key elements of the business plan are:
Provide detailed information about your company, including who the target audience is and what problems your business will solve for them. Spell out whether your company will service other businesses (B2B) or consumers (B2C). Here is where you can go into details about your company’s competitive advantages how those advantages will translate into success. Advantages can include location near a booming area of town, technological advances that only your company can offer, skill set and successful track record of your management team, and other building blocks of success.
Be realistic in your assessment of the competitive landscape for your area and for the industry overall. If you are going for an upscale, niche market, will those target customers be willing and able to pay premium prices. Research how many other businesses are targeting the same customers. List their strengths and weaknesses and spell out why and how you will be able to gain market share against them.
Describe the legal structure of your business (sole proprietorship, partnership, C or an S corporation, or LLC).
Provide bios of top executives that highlight their past experiences and how their knowledge is relevant to running your business. If you are opening a new restaurant, your chef will be a driving force… but so will a general manager with experience running successful food & beverage operations. The two skill sets are not the same and should be compatible.
Service or Product
Here is where you will go into the details of what customers get for their money. If yours is a value offer, focus on cost considerations, while if you are looking for premium customers, highlight strongly the benefits you offer and why someone should pay more for them. If you have copyright or patents, list them out in this section.
Sales and Marketing
Few businesses ever set out with one marketing strategy and ride it forever. Market forces change. For instance, Millennials, who now represent the biggest section of the American population, have radically different priorities and spending habits than the generations before them. They are putting off marriage and starting a family, choose city living in an apartmentover owning over maintaining a home in the suburbs, and are more willing to pay for conveniences like food deliveries than their much more frugal parents.
Your goal in this section is to describe how you’ll attract and retain customers. You’ll also describe how a sale will actually happen. You’ll refer to this section later when you make financial projections, so make sure to thoroughly describe your complete marketing and sales strategies.
This is a critical part of the business plan – the part of the plan where you make the request for financing. Entrepreneurs must be sure to borrow enough money to get yourself through the startup period. Inevitably delays will occur and unexpected costs will arise during the first years of operation. Borrow enough money to weather the storms.
Going back to the bank a year later to ask for more money because you underestimated your expenses will be a challenge. Instead of instilling confidence that your company can pay back the loans, this scenario will raise flags about your financial management and the viability of the company. Remember that a lender’s primary concern is whether or not the money will be paid back with interest.
Detail how much funding will be required to launch and grow your business over the next five years and how the money you are borrowing will be spent (equipment purchases, salaries, buying a building, etc.). Provide a timeline of when and how you plan to pay off your debts.
Back up your request for money with financial projections that will demonstrate your ability to repay the loan(s). Startups will have to provide estimates of future success, while established companies should include banks statements, P&L documents, and cash flow statements. List any collateral you can put against your small business loan.
Including charts and graphs can be very helpful in painting the picture of your company’s prospects of success. If your business is personality-driven, why not include resumes and photos of the key players? Other supporting documents can include product images, copies of patents, references, existing sales contracts, licenses, certifications, and permits.
Ask for help
Not everyone has the ability to write a business plan on their own. The SBA provides advice through partner organizations including local Small Business Development Centers and Women’s Business Centersand SCORE offices. There are also many software programs that can help guide entrepreneurs through the process. If time if your biggest issue, consider hiring someone to write the business plan for you.
Above all, remember that a business plan is not a “one-and-done” type of document. It provides a point of reference that can continually be referred to as the coming years progress and as your business grows. Look back at your plan periodically to determine if you have met your sales and profitability targets and to begin devising strategies to address deficiencies so that goals can be met.