A business plan is a valuable tool that can help you secure the capital you need to fund your small business. If you plan to approach several banks for a small-business loan, they will require a business plan. A well thought out plan outlines your company’s vision and what it will take to grow your business. Without a thorough business plan, your chances of attracting the financing you need to fund your company are minimal.
Include a Business Description
Your business plan should start with a description of your company. Discuss the industry you plan to enter and explain to the bank or your investors what the future holds for your industry. Include the present outlook and back it up with facts and figures. Banks can tell if you have done your homework, so demonstrate to them that you know your industry inside and out.
Financial Estimates/Operations Management
When you present your financial estimates to banks (and they are going to want estimates), be conservative in your numbers. For example, if you feel your company can grab a 40 percent market share in the next three years, explain to the bank how you plan to capture that share. However, include a much more credible number, such as 10 percent per year, until you reach your goal of 40 percent.
Know Your Competition and Your Audience
Banks want to know who your competition is and what your strategy is to beat them. Never criticize or belittle your competitors in your business plan, but do explain how you plan to separate yourself from your competition by clearly outlining your marketing strategy.
Your target audience is not just your customer base. Your business plan must also speak to potential venture capitalists, angel investors or individual investors. If you have a company that you would like to partner with and start a joint venture, prepare a business plan for that company as well.
Avoid Adjectives and Superlatives
Adjectives and superlatives belong in product descriptions, not business plans. Avoid words such as “the best,” “unbelievable,” “amazing,” and “fabulous” like the plague. If you want to describe your business as “unique,” make sure you can prove to the bank that your business is in fact unique. If a bank wants to know why you think your business is “one-of-a-kind,” be prepared to back up your claim.
A business plan is imperative to the success of your blossoming business. By following the above tips, you will set yourself and your business up for success right off the bat!