Preparing your business plan
Ready to take your idea of a small business and turn it into a reality? You will need to have a good business plan in order to capture the attention of lenders and also investors that may want to help your company get started. There are a few things you can do to make preparing a business plan a lot easier. Here are some tips that may help:
- Identify your audience type and funding type. Who do you want to fund your business?Some people are able to make up a portion of their money from private investors, while others will obtain their funding from banks only. This section of your business plan should be about 15-30 pages long and needs to include an analysis of your business. You must talk about where the funding will take the company and how it will allow the company to grow and how soon you will be able to repay the loan. You must also discuss your target audience. Break-down your target audience by age, gender, location, and race.
- Market Research. People need to see what your product is, why people want it and how you are going to sell it. You can produce some test products and collect customer feedback with random sampling in order to provide the business plan with adequate research.
- Collection files. These files will provide information about your experiences and research for your small business and also your general hard work. Generally these files will not look professional, but they do need to be included with the business plan as they are of importance to some lenders.
- Research process involvement. Provide an overview of the market industry and discuss how your product or service will revolutionize the industry. During this phase of the business plan, you will contact experts in your field and talk about the fundamentals of the industry. This is a great time to build your network of contacts and include them in the business plan.
- Analyze the data. What data have you collected and can you clearly explain how the processes began and where you plan to take the company? This section must also help you develop a contingency plan, risk assessment, and competitive profile so you can make a name for yourself.
- Financial records. New businesses rarely have numbers to show to lenders so you need to get pretty creative. You will need factual evidence to support the numbers you are putting up to the lender. Find out how much money you will need by looking at the industry ratios and evaluating where you want to take your business. You must not be too optimistic, as this can cause banks to overlook a loan. Do as much research as you can to provide realistic numbers for production, staff, and other expenses. Don't forget inflation as well if you are creating a long-term business plan.
- Executive Summary. This needs to be the section that you write after the business plan is good to go. The executive summary will include information about the key points of the business plan, the loan payback requirements, and the return on investment you plan to produce. Normally the executive summary is one or two pages long and it is attached at the front of the business plan.
Take a look at other business plans to see how they are organized and how big they are. You don't need to overwhelm the lender with 100 pages of records for them to offer you money. Just get the facts in there and the information they want and you will have a simple time getting the money to start your business.