A business plan sets forth in simple but informative language the strategies and plans for your business. It provides a road map to guide your business through its profitably beginnings. Many investors, bankers, and lenders are impressed by a well-organized business plan. In a lending environment, a well-prepared business plan can make a big difference to your loan approval.
The executive summary is the first page of a business plan. The summary needs to tell the reader what you intend to do with the business over the first year. It is extremely important. Your executive summary, like the rest of the pages of your plan, should provide a road map to the success of your company. If you can show an accurate and comprehensive picture of your first year financial results, it will add significant value to your lender or banker.
One of the key components in the executive summary is a description of the competition you will face in the industry. Competition is something many people take for granted in their business. But it is one of the most vital factors determining whether your business will be successful or not. You should take time to research the competition you will be up against, both in the marketplace and online, and present the information in the pages of your business plan.
You should also spend time in the preparation of your business plan referring to the competitors you will be up against in your market. You must provide an accurate assessment of how you intend to compete with the competition, and you should include a copy of their annual and quarterly reports. You should also study the policies and procedures of your competitors to better understand how they operate, and you should try to determine their strengths, weaknesses, opportunities, and threats.
The cash-flow statement is the lifeblood of your business plan. This statement shows your financial position at the end of a period of time, usually one year, that includes all of your capital assets and liabilities. It should include a balance sheet that lists the income from investment and financing activities. It also includes sales and purchases analysis, which will help you determine how effectively your business operates, and any fluctuations that may occur within the cash-flow statement. The purpose of a cash-flow statement is to allow you to make good financial decisions in regards to the operation of your business.
A business plan often begins with a business description. A business description describes the nature of the services or products offered, and it generally includes the following sub-sections: Company Overview, History and Position, Marketing, Finance, Research and Development, Business Strategy, and Business Description. A company overview represents the gist of the company description. It provides an overall view of what your business does, why it exists, who your target market is, and what your products or services offer.
The history and position section of a business plan is extremely important. This section will typically cover the history of your business, including dates of formation and financial records. The marketing section will detail strategies and techniques that have been used to develop the business concept. A financial description is intended to show how the funds raised will be spent and what the anticipated effects will be after funds are obtained.
Finally, a business strategy will describe how you intend to implement certain methods of business development, such as entering into a licensing agreement or entering into a partnership with another firm. This section must also be carefully designed, and it is best to outline your strategies before writing the entire plan. The last portion of your plan should summarize your total number of customers, including the number of customers that have been paying for services on time. You need to include this information in the sales analysis to calculate your revenue model. This section is often the most difficult for entrepreneurs to write, but it is an essential element of your plan.
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It is important that you have a solid understanding of what a business plan actually is before you begin to write it or hire someone to write it for you. A business plan is a document prepared by an individual or group to help another individual or group to determine if a venture is worthwhile. Essentially, a business plan is a proposal detailing how the business owner plans to make money. Business plans are very important documents to have when beginning a venture.
So, what are the parts of a business plan? There are several sections to a business plan, and each of these is as important as the other. A business plan begins with an Introduction. An Introduction is designed to entice the reader into reading the rest of the plan. In this article, you’ll learn what each of these parts are and why, and also learn what to include in those sections.
The Introduction is perhaps the most important part of a business plan. This is where you describe the unique value proposition of your firm. In short, this is where you give your customers and potential clients a short description of who you are, what you do, and what sets you apart from your competition. Your introduction should also describe your firm’s mission, how you plan to achieve that mission, and what you will do to accomplish it. Additionally, you need to identify any other special or unique aspects of your business that make it unique.
Next, you need to describe your financial funding needs. Most business plans outline the cost of starting a new business, which will vary depending on the type of startup you want to undertake. Generally, if you are applying for traditional funding such as a loan or equity loan from a bank or other lending institution, your financial funding requirements will be determined by your personal credit history, your level of borrowing experience, and the current market interest rates. If you are seeking venture capital funds or angel investment from a private individual, the description of your new business’s need for funding will differ slightly.
The executive summary should provide a one-page executive summary with information about the company’s key personnel, its mission and vision, and its three years of historical success. This summary provides a brief history of your company, why it was started, and the three years of development that led to the current status. You should emphasize that the executive summary is designed only to provide a brief assessment of your business plan and that the full, three-year version of your business plan will be provided to investors upon receipt of your application.
The third section of your business plan is known as the marketing plan. In general, this portion of your business plan is generally not required to be more than one page in length. However, you should provide a detailed description of your target customer, advertising strategy, and resources needed to execute your plan. If you intend to seek assistance from outside sources to execute your marketing plan, mention these potential vendors in the marketing plan. As an alternative to a marketing plan, you may also include an abstract of your technical plan, a study of your competition, and your forecasted revenue and expenses.
The fourth section of your business plans should detail your financial projections. While financial projections are not critical in determining whether you will receive funding, they are useful in helping you meet the criteria for approval by a prospective lender. Specifically, your financial projections should detail your revenue and expenses over the three years beginning with the year in which you intend to begin operation, followed by the next two years of operation and maintenance, respectively. For any business plan, the accountant or financial analyst is often asked to review and provide support for the projections you have provided in this section.
The final section to your business plan is the sales projection. This includes detailed sales projections, taking into account such things as seasonal increases and decreases in business revenues and expenditures. It is advisable to provide a range, rather than a precise number, of anticipated future revenues. If you anticipate an unusually large or small year-end revenue difference, the sales projections will probably under-estimate your actual results. As an alternative, use the numbers in the financial statements to adjust your revenue estimates and to meet the requirements of your lender or broker.