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Why you should have a business plan

Small business owners may feel too overwhelmed by the day to day running of their business, to worry about having a business plan. However, this can be a mistake. One of the major reasons to have a business plan is to have something in writing if you need to obtain additional financing. The reality is that acquiring financing, investors, and partners for your business, can be a challenge, if you don't have the right type of documents ready. A business plan also provides you with a tool to teach others about your business, so you can acquire the financing; you need along with other things. It is important to realize that there is no reason to be overwhelmed since a business plan is easy to create, and it will easily help you establish yourself as a reputable company.

  • Understand your business plan-The first place you need to start with is by understanding, exactly what a business plan is. A business plan will allow you to focus on the immediate needs, and the future needs, of your business. In your business plan you will outline what your products or services will include along with information that will pertain to your target market. You should also include market research information, along with a marketing plan and financial projections for the business. Keep in mind that even if you have been in business for awhile, you will need to upgrade your business plan, to prepare the company for growth and development.
  • Understand the business plan outline-It is important to understand that outline for your business plan. There are several elements you need to include in the business plan. Here are a few key elements to include:
    1. Summary
    2. Mission statement
    3. Keys to success
    4. Market analysis
    5. Financial analysis
    Lenders will need to see that you have done the research you need to communicate your financial state. However, it is also helpful to have done a financial projection, that allows you to see your break even costs, and lets you find out if you need to start focusing on generating more income, to sustain the needs of the business.
  • Understand that you need to make it specific-You will need to understand that a business plan will change for each industry, and for your particular business. Don't fall into the trap of a one size fits all business plan. You should provide a general business plan to lenders and others; and make sure you create a specific business plan. Keep in mind that a financial history is a huge part of the business plan, and you need to spend extra time on this, to make sure you have all of the documents you need for the lenders.
  • Understand the documents you will need for lenders-There are certain documents that should be attached to every business plan for lenders to go over.Here are the main elements that are important for lenders to see:
    1. Cash flow projections-Keep in mind that if you have cash flow statements already, you can use them to develop cash flow projections for the future. Future cash flow projections will allow lenders to see that you can actually sustain the loan. Remember that cash flow is vital to your business, and without it you will have a hard time keeping your company afloat.
    2. A plan for success-Your lender will want to know how you are going to get the product out of your hands and into the hands of the consumers.It is important to understand that a good marketing strategy goes a long way to show lenders, how you will implement your business for success.
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