The best way to show bankers, venture capitalists, and angel
investors that you are worthy of financial support is to show
them a great business plan. Make sure that your plan is clear,
focused and realistic. Then show them that you have the tools,
talent and team to make it happen. Your business plan is like
your calling card, it will get you in the door where you'll have
to convince investors and loan officers that you can put your
plan into action.
Once you have raised the money to start or expand your business,
your plan will serve as a road map for your business. It is not
a static document that you write once and put away. You will
reference it often, making sure you stay focused and on track,
and meet milestones. It will change and develop as your business
evolves.
Do I need a business plan?
Not everyone who starts and runs a business begins with a
business plan, but it certainly helps to have one. If you are
seeking funding from a venture capitalist, you will certainly
need a comprehensive business plan that is well thought out and
contains sound business reasoning.
If you are approaching a banker for a loan for a start-up
business, your loan officer may suggest a Small Business
Administration (SBA) loan, which will require a business plan. If
you have an existing business and are approaching a bank for
capital to expand the business, they often will not require a
business plan, but they may look more favorably on your
application if you have one.
Reasons for writing a business plan include:
- Support a loan application
- Raise equity funding
- Define and fix objectives and programs to achieve those
objectives
- Create regular business review and course correction
- Define a new business
- Define agreements between partners
- Set a value on a business for sale or legal purposes
- Evaluate a new product line, promotion, or expansion
What's in a business plan?
A business plan should prove that your business will generate
enough revenue to cover your expenses and make a satisfactory
return for bankers or investors.
- Executive Summary--features the highlights of your plan and
sells your idea in two pages or less.
- Company Summary--a factual description of your company,
ownership, and history.
- Products (or Services or both)--describes your products
and/or services and how they stand out from competitive products
and services.
- Market Analysis-provides a summary of your typical customers,
competitive landscape, market size, and expected market
growth.
- Strategy and Implementation-describes how you will sell your
product, how you will put your plan into action, and establishes
milestones.
- Management Summary-provides background on the management
team, their experiences, and key accomplishments.
- Financial Plan-contains key financials including sales, cash
flow, and profits.
What makes a successful business plan?
