It is something every business owner dreads. It is time consuming, yet overlooked and undervalued! And it is absolutely essential for obtaining a loan or venture capital funding.
There are a few reasons you would, or should, complete a thorough business plan!
1. To understand the opportunities in your industry and to define a clear path as to where you want to go and how you intend to get there. 2. To obtain SBA, Small Business Administration, financing in order to obtain the funding to grow your business. 3. To obtain Venture Capital / Angel Investor funding.
Although many companies manage to succeed without a business plan, or with an incomplete plan, it is still highly recommended to complete a thorough plan to anticipate future obstacles, understand your target market and industry, and determine goals and objectives in order to pave a clear path to success.
Critical components of any business plan include the following:
The Executive Summary
This is the most important part of a business plan for both lenders and investors! This one to two page business summary provides the determining factor as to whether your potential funder makes their go / no go decision. You should spend eighty percent of your effort on writing a great executive summary and it should be based on the research and effort that went into your overall plan.
General Company Information
This includes your mission statement / vision statement, philosophy, legal entity info, goals / objectives, and company / industry description, in-depth description of products and services, advantages and disadvantages and your pricing structure.
Your marketing plan needs to be a complete plan in itself !! This requires research relating to your target market, demographic profiles, growth potential, barriers to entry, benefits and features, your competitor strategy, unique selling proposition, promotion / advertising methods, pricing and location strategy. Investors rely on your future growth potential, competitive analysis and unique selling strategy to determine if your company is worth the time and investment.
Your operational plan should include production techniques, quality control, customer service, inventory control, product development, location details, logistics, legal environment, human resources, suppliers and credit policies.
Management / Organization Structure
Include a visual of your company hierarchy, background of owners / partners, permanent employees and contractors, and complete job descriptions for each position. Make sure to attach resumes` of owners and management. Investors will look for a rather strong management background and proven record of success! In a survey of 250 venture capitalists, it was ranked as the top scoring criteria!
- Personal Financial Statement
- Cash Flow Analysis
- 12 Month Profit & Loss Projection
- P & L to date, if already established
- Balance Sheet
A few great resources to assist with your business plan include SCORE (Service Corps of Retired Executives http://www.score.org ) and the Small Business Administration. Both have great templates for startup businesses or those looking to expand. Or contact Versatile Writing Solutions … after an in-depth interview, we will prepare your plan for debt or equity funding, or assist with organizing your start-up process.
Check back for Part Two: Writing for Lenders & Venture Capitalists