The Definition of a Business Plan
A business plan is a map of your future business, outlining all aspects of the business to both you and potential lenders and investors. A comprehensive business plan should cover all important areas listed below. The length and detail of the business plan will depend on how much money you need to grow your business, and how large your potential business will be as well.
The intro tells the reader all about the type of business in which you are investing. It should be brief but to the point. If you are describing a current business, highlight any achievements the business has made recently. It should mention the short and long term goals and project what is in store for the future. It should also list the objectives for reaching future projection goals. List the strength and weaknesses and identify how to stress the strength and eliminate the weaknesses.
- Company structure
List and outline the corporate structure of the business. This includes shareholders and/or partners. A profile of each key person involved in the business should also be included. Remember, the lenders need to see sound competent managerial skills. It is a good indication that the business will be in good hands thus resulting in a successful business.
If a brick-and-mortar location, a description should relate to the benefits of the building with the benefits of its accessibility to customer traffic. Detailed information is essential about the growth rate in the area, demographics, income levels etc. should also be explained.
- Marketing strategy
List all of your plans for projected sales. Your marketing plan should be descriptive and also financially viable. Include your written up marketing plan to your business plan and any other marketing relevant statistics to support your proposal. Marketing is key to the success of your business so prepare this section in depth.
- Industry potential and future trends
Describe your industry in full, for example, how it grew in the past and where it is headed. List some successful businesses in the same area. Show how economic trends change and how your type of business will have longevity and can adapt to these changes.
- Cost of overhead sales
The goal of your business is to make profits which come from the goods/services you are selling. The basis of your business plan is the profit margin. Research the product costs and determine all other related costs, for example, the manufacturing or distribution process, freight, packaging, wages etc. A thorough financial analysis is key to a successful business plan. List obstacles and risks, and how you propose to overcome them.
- Projections & Cash flow
Projections and cash flow show profits and/or losses for each month. The revenue and expenses of at least one to two years should be calculated. A projection shows what you expect to generate in sales and pay out in expenses; a cash-flow shows how soon you will receive the money from the sales and when bills must be paid. You may want to consult an accountant to prepare these for you.
Funding is the amount of money you need to borrow, how you expect to repay it, and over what period of time. This information should come from your projections and cash-flow section.
Any documents that will back up all the information you've presented on your business plan should be included in this section. It should include copies of the following:
- Market research information
- Copies of permits, licenses, patents, trademarks
- Cash flow and projection sheets
- Copies of reference letters
- Business registration letters
- Resumes of key partners/employees
- Financial statements
- Assets and liabilities
If you have never prepared a business plan before, you may want to gather all of the pertinent information and find an accountant or consultant who will prepare it for you. It must be professionally prepared. If you feel capable of preparing a business plan yourself, make sure to use all available reference materials from reputable business organizations, such as libraries, publications, banks etc. The preparation of a business plan takes time. Do it right and the results will be invaluable for the healthy future of your business.
Do you have a business plan? Has it helped in your business growth? Please share your comments below.
About the author: Sonia Colon is writer/publisher at My Fashion E-Mall Blog & The Biz Buzz of a Latina Mom Blog. She is also owner at BooksAboutMe. For additional powerful business articles and Internet marketing tips for maintaining a lucrative business sign up for her monthly newsletter below!
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