The Need for a Business Plan

Version 4
    Written by user: LUCKIEST

    If you want to raise money to finance a new business, the operation or expansion of an existing business or to buy a business - you need a business plan. Sources of capital, investors and lenders, will not consider providing money to your business unless you have a plan. Preparing a business plan forces you to think through every aspect of your business. The plan must show that you have really thought about and through what you are proposing.

    A good plan helps you focus on markets for your product or service, anticipate future needs, monitor progress and help you to be proactive - not reactive.

    A good business plan is a road map for your business. Many business planners can begin with a condensed business plan to get things started.

    Summary
    The Summary is a brief overview of your business - not to exceed one page. It should highlight the key ideas in your plan and help the reader to make sense of what they will be reading.

    Business Description
    The Business Description is an overview of what your business is (or will be) and what it does. For example, Luckiest Enterprises is a partnership set up to manufacture widgets. It is located in a 2000 sq. ft. facility in Anytown, N Y and wells through a distributor network to customers worldwide.

    Market Analysis
    In the Market Analysis, describe who your customers are or will be. Are they businesses or individuals?. How many customers are out there? How big is the market? What are past, current and future trends? What part of the market will you be selling to?

    Product or Service Analysis
    Here you describe what your product or service is and why customers will purchase it. What makes your produce unique? What are the features or benefits of your product or service that are better than the competition?

    Competition
    Identify the top 3 or 4 companies that provide the same product or service (including foreign competition). A good place to start this research is the yellow pages, industry directories and the internet. What are your competitor's strategies in market, sales, and operations.

    Marketing Strategy
    This section should describe how you will reach your customers and your sales goals. Be specific. Identify how you will get sales, how you will reach specific markets, how you will price the product or service and how the product or service will be distributed.

    Operations
    Describe how you will make or obtain your product or service. Again be specific in describing how much space may be needed for machinery, storage, packing and handling and how much office space you need. How many people will you need and when will you need them.

    Management
    Here you need to identify who will be in your business. What experience you bring to the business and how your background relates to the business. Provide resumes or detailed descriptions of the backgrounds of yourself and the people that will be working with you.

    Finances
    In this section you describe how much your business proposal will cost. If your business is already operating, provide financial statements and tax returns for the last 3 years.

    Estimate how much it will cost to do the things you are proposing. Identify the specific costs of making your product or providing your service and can you charge enough to make a profit.

    Estimate the operating costs you will incur in your business: rent, wages, benefits, insurance, advertising, telephone, utilities, travel and sales expenses. If you are borrowing money, don't forget to include the proceeds of the loan and repayment of principal and interest. As you work on the numbers remember to write down the assumptions that are behind the calculations.

    Use the sales and cost info to prepare projected financial statements. You may need the help of an Accountant to provide Source and Use of Proceeds, Cash Flow Projections, Income Statements and Balance Sheets, Break-even Analysis andmSpread Sheets.

    Supporting Information
    Provide copies of brochures, photos, news clippings or other relevant info that you feel will help the reader to better understand your proposal. For example, a photo can help someone to understand what your product is.

    Timing
    Prepare a schedule that reflects major milestones for the next 3 to 5 years. This can be presented by using charts and a brief explanation. You can also address planned production introductions, noteworthy sales events like trade shows and tie in promotions and significant changes to your customer base

    Everybody going into business should have an Accountant, a Lawyer and an Insurance Agent.

    Another great source is SCORE, both in person and online.
    SCORE is FREE. You can visit SCORE at http://www.score.org/