BUSINESS PLAN 101: Documenting Your Future brought to you by APGFCU
November 23, 2021
Almost every successful business starts at the same point: developing a business plan. Business plans help you create concrete goals, plans, and milestones by putting pen to paper and laying out exactly where your business is going and how it is going to succeed. This step is often a sticking point for entrepreneurs seeking a business loan, as many lenders require a solid business plan to move forward in the loan process; however, it can be challenging and time-consuming to compile.
To get started, you can ask yourself two basic questions: What are you writing about and who are you writing to? Think about the goal of your business plan and what you want to get out of it, whether that is funding, a partner or simply organizing your ideas. Then, think about the person reading your business plan and the qualifiers they are looking for. Lenders often have a list of requirements that borrowers must meet to be granted a loan – ensure you are aware of these requirements and include them in your business plan.
Once you have a firm grasp on the purpose of your business plan and its intended audience, it’s time to consider four main elements that will have a significant impact on your venture and loan approval.
1. The People
Research suggests that 60% of new businesses fail because of issues within the team … Continue reading. Consider who is going to be running your operations day-to-day and decide if they have the startup experience and industry knowledge necessary to make your business successful. These people also include any third-party providers that will be equipping your company with resources. You must be able to trust and rely on the people around you for your venture to become profitable.
2. Your Niche
Starting a business is an opportunity to create something that addresses consumer needs in a way that no one has done before. What are you going to sell? Who is your intended audience? What makes you stand out from your competitors? Answering these questions in addition to how your company will scale in the short and long term will enable you to create a more actionable plan.
3. The Nitty Gritty
The success of a business comes down to numbers: Sales, market value, and growth potential play a vital role in whether or not a lender will view you as a risky investment. Monitor the pulse of your industry as well as demographic and economic trends, competitor data, and the current regulatory environment to determine your chances of succeeding in the market.
4. The Disaster Plan
Things can go wrong quickly when starting a business. Issues are inevitable, so it is important to be transparent with your shareholders to avoid confusion down the line. Evaluate the people, product, market, competition, and finances with your shareholders upfront to eliminate any apparent risk and prepare for the unforeseen.
Now that you have a firm idea of how your business venture will operate, let’s take a look at laying out your business plan.
· Cover Page: Include the name of your business, the date submitted, and your name, location, and contact information.
· Table of Contents: Business plans can be long, so be sure to include a page with each topic and corresponding page number to easily access information.
· Executive Summary: Briefly explain your business, its purpose, and why you think it will succeed with data including industry and economic evaluation to back up your claims. You can also include competitive analysis, financial potential, level of risk, and your mission statement. Don’t forget to mention the capital that you are requesting.
· Business Overview: Describe your business thoroughly so a potential investor can understand why you are starting the business, why it is important and how it is going to appeal to consumers.
· Industry Description: Outline the industry that you are trying to venture into. These details include its size, recent trends, competitors, challenges, and future outlook.
· Competitive and Market Analysis: Prove that there is a need for your business in your industry by showing what current competitors lack. Be prepared with consumer demographics and trend data and explain how your business can offer something to fit their needs.
· Team Introduction: For a company at its beginning, one of the only factors that lenders have to evaluate is your team. Introduce the people that will be helping to run your business, their backgrounds, experience in the industry, skillsets, and specializations.
· Operational Summary: Dig into your daily operational plan and concrete steps to support them. Utilize visuals, including graphs and charts, to show your supply sources, timelines, financial data, and breakeven point.
· Marketing Strategy: Selling a product is the goal, but how are you going to sell it? Outline a plan to appeal to your targeted audience based on their proven buying behavior and value.
· Financial Performance: Possibly the most crucial and of-interest topic is your business’ financial projections. Include the amount of money you are seeking from investors and how that money will be used to better the business, as well as income statements that forecast the next three to five years, cash flow statements, and balance sheets based on expert accountant data.
· Attachments: Include any additional documents of value that demonstrate your profitability and creditworthiness to a lender. Visit our website to find out how we are helping businesses like yours get the funding they need.Share This Post