If you’re planning to launch your own company, one of the first things you should do is work on creating a business plan. It’s vital to have a business plan since it acts as a compass that points in the general direction that your company will go in the future.
A business plan is an
important ingredient in the success of a start-up business. It will assist you
in accomplishing the goals that you have set for yourself and contribute to the
success of your company. A business plan will help you carefully consider the
specifics of your company and its future.
As you continue to work
on your plan, you’ll be able to deal with issues before they become a problem,
saving both money and time. Writing a business
plan in entrepreneurship will help you improve your chances of success and
avoid making serious mistakes.
Having a business plan
is essential if you’re looking for funding from investors for your company.
Before taking a chance on your company, the majority of lenders and investors
will want to ensure that you have a detailed business plan in place. It
demonstrates that you’re serious about making your business a success.
If you intend to present
your business plan to prospective lenders or investors, you must verify that
your financial projections are correct to ensure that your plan will be taken
seriously.
Launching a business is
a significant undertaking, and you can use a startup
business plan as a management tool to help you focus on where you currently
stand concerning your goals for the company’s future. This will help you keep a
good handle on the everyday chores you have to complete, and also assist you in
achieving your long-term objectives.
#1. You’re trying to decide whether to start a business
You may be the only one
who reads this plan, although you should have input from several other people
with business experience. You need to ask yourself the following questions and
incorporate the answers into your business plan:
· What does it take to
succeed in this type of company?
· Do you have the skills
and background necessary?
· Can you afford to take
the risk? What effect would the business’ failure have on you?
· What is the growth
potential for the business? Can it meet your financial expectations and
requirements?
· Is there a large
enough market for your products/services?
· Will you enjoy owning
and managing the business?
#2. You want to jump-start your business
Whether you’re an
entrepreneur doing business on the Internet, a stay-at-home Mom with an arts
and crafts company, or a writer trying to break into publishing, a business
plan acts as a guide to success.
Developing your business
plan helps you determine your objectives and focuses you on the strategies and
action plans necessary to accomplish those objectives. If you’re looking to
boost your business, it’s time to answer a few questions in your business plan.
· What are your skill
levels and talents?
· What are the goals for
each month’s sales?
· What are your
resources, time available, advertising and promotional budget, and website?
· Do you have the
necessary equipment? If you don’t, how will you obtain the equipment?
· What barriers could
you face?
#3. You want to better organize your company or improve its operations
This is a time- and
task-oriented plan for internal use. It suggests actions that need to be taken
and assigns responsibility. Here are some questions that need to be answered:
· How does our company
compare to leaders in its industry?
· What are our
management weaknesses? How can we make improvements?
· How can we increase
sales, serve the customer better, improve manufacturing efficiency, and
increase the gross margin?
· Do we have the
necessary resources to make the above improvements? If not how will we obtain
the resources? Do we need a bank loan or line of credit?
#4. You’re seeking a bank loan
Your business
plan presentation can be used to inspire confidence in your banker and
convince them that your business is a good credit risk. It is written very
logically, with an emphasis on the financial projections and presentation of
historical financial results.
Bankers who make bad
loans get fired, so they like to err on the side of caution. A banker is
looking for safety and a demonstration that the company can generate sufficient
cash flow to pay the interest and the principal.
Bankers are not looking
for a huge return on their money. They don’t want to take part in the
management of your company or sit on the board of directors. Your business plan
will need answers to these questions:
· Will the company’s
cash flow be stable enough to make the payments on the loan?
· Are the long-term
prospects of the business favorable?
· Does the company have
a reasonably good track record?
#5. You need an investor or partner
Your business plan must
demonstrate considerable upside potential for the business. The banker was
content to get his money back plus, say, 10% interest. The investor may want a
return of 30% to 50% or more.
This plan must be well
written and keep the reader’s attention. Your business plan is competing with
all the other plans submitted to the investor. Make sure you address the
following questions:
· Can the company grow
rapidly?
· Are the margins
attractive?
· Have you succeeded in
other business ventures?
· Is this a market that
is emerging, with a large and bright future?
· How much of the
company are you willing to give up, both in equity and management control?
#6. You want to sell your business
You must prove to a
potential buyer that your company is worth paying a premium for. Sometimes this
can be called a marketing presentation, an offering memorandum, or a valuation.
It is not strictly a
valuation, as you’re trying to establish your sales price for the business, not
determine a value. An impartial third party typically completes a valuation.
You’re likely to be asked:
· Is there untapped
potential for the business that a new owner could take advantage of?
· If the new owner had
more capital, could the business grow more rapidly?
· Are there new markets
that could be entered?
· Could costs be reduced
and profits increased?
Every business should
have a business plan. It’s the road map to success and is critical if your
company is seeking financing. If you make the decision to operate your company
without a strategic
business plan, there’s a good chance that it will fail. While making a
business plan can take a significant amount of time and effort, in the end, it
will be well worth the effort.
Comments