Your road map to business success.
Now, more then ever, a well thought out Business Plan is seen as a necessary tool for building a viable business. Whether you are seeking financing from a lender or plan on approaching the Small Business Administration for a loan guarantee, a well thought out plan of action is essential for presenting the formalities of the proposed venture. In today’s highly competitive marketplace, a formal operating plan may mean the difference between success and failure.
What is a Business Plan?
Simply put, a Business Plan is a written statement outlining how you intend to operate your enterprise into the future. While most new business owners have a general idea of how they want to run their company, those intentions are usually not formalized. As the business grows and new challenges emerge, the owner often needs to involve others in the venture. This is a time when the owner finds himself/herself under pressure to formulate a plan for future growth. Unfortunately, this time period affords the least amount of time for planning.
The following are compelling reasons for developing a formal Business Plan.
A Road Map To Success
Very few entrepreneurs achieve their goals without first formulating a well thought out plan of action. Any responsible entrepreneur will spend the time necessary to record his / her expatiations for the business. Good planning guarantees preparedness for the future thus reducing challenges to their lowest denominator. Reducing challenges means less risk and a higher probability of success. It just makes good operating sense to plan ahead when risking time, money and resources.
Predetermined Check Points For Measuring Progression Of Goals
Like a traveller sets off on a journey and plans when to reach his/her destination, a Business Plan also serves as a guide for the journey. With a Business Plan in hand, an owner can set checkpoints in which progress can be measured and adjustments made. As each step in the business plan is reached, an evaluation is made. Further funding can be applied for physical expansion, upgrading equipment or more employees. As each goal is satisfied and a cycle of activity is completed it signifies the beginning of new goals. New goals, mean an extension or reevaluation of the plan.
The Business Plan Is A Vehicle For Involving Others Into The Venture
Even if there has been no need for employees, a sound Business Plan sets the stage for bringing new people into the venture. This assures everyone understands the goals of the business and what is expected of them. Far too often the owner thinks he/she can commutate with their small staff of workers only to find out their employees don’t understand the overall plan. A Business Plan provides needed direction for everyone to stay on the same track. The planning process also assists in the expatriation of meeting goals to the employees and reducing the possibility of any unscheduled crises.
The Importance Of Developing A Loan Application
A good Business Plan will be required by the lending institution before financing can be had. Even if you want to apply to the Small Business Administration a lending institution must first approve the loan. The SBA will guarantee the loan up to 80% but the lender will still need proof of capability. The question is, are you capable of running a business? The lender will ask for proof of experience, collateral and a statement on how you plan on paying back the loan if the venture fails. Even if the lender is a friend of yours, your relationship is strictly business as he/she demands assurance of repayment. You must provide them with reasonable assurance you know what you are doing and how you plan on doing it.
The Business Plan Provides:
A picture of past experience
A plan for the future
Makes financial needs clear
Identifies possible threats and provides reasonable solutions
Serves as a communication tool
Establishes direction and sets company goals.
Do not take anything for granted. Be prepared for anything that can happen before it happens. If you put it off until something happens it will cause a disruption in your ability to perform. Every section of the Business Plan should be considered. First settle on your legal description, name, product or service and logo. Then find a good location and bring everything together with your Business Plan.
Here are some of the things a Business Plan should contain.
A. Description of Business
Form of Ownership
Products or service offered
History of past experience
What is the Niche served
Need for a niche – demand
The longevity of the product or service
C. Management / Personnel
A. Pro forma Cash
Detail by the month for the first year
Detail by Quarter, Second & Third years
Notes of Explanation
B. Pro forma Balance Sheet
Income Projection (profit and loss)
Detail by month, the first year
Detail by Quarter, Second & third years
Notes of Explanation
D. Financing Requirements
E. Insurance Requirements
All expatiations should be considered when writing a Business Plan. Project one year, five years and ten years. Break down each segment into its lowest denominator. If you want to make x amount of dollars, how many sales will it take and what will each sale consist of? Find the answers and put them on paper.
Plan to be productive and successful. Contemplate any and all possibilities good or bad. Consider the “what if” factor. Seek professional advice and don’t sell yourself short. Being self-employed is not for the faint at heart. It is a tough road to take. You will have to work hard to spend long hours and put up with a lot of rules and regulations. It is not the answer if you are seeking freedom from an employer. Self-employment will suck the energy from you but if you planned right you’ll be able to spend some time with the family after a few years.
Source by Donald Yates
FOR INFORMATIONAL PURPOSES ONLY. This Website is made available by the Publisher for educational and other informational purposes only, and this Website seeks to facilitate engaging and constructive conversations about business innovation and the application of technological advances in business and administrative profession. The “Publisher” is Kaduna Business School, LLC.
FAIR USE NOTICE. This Website may contain copyrighted material the use of which has not always been specifically authorized by the copyright owner. Such material is made available in an effort to advance understanding of issues of innovation and the application of cutting-edge technologies in the law and the legal profession. The Publisher believes this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the U.S. Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this Website is included for educational and informational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond “fair use,” you must obtain permission from the copyright owner. https://ezinearticles.com/?How-Important-Is-The-Business-Plan?&id=882170 How Important Is The Business Plan? Donald Yateshttps://ezinearticles.com/expert/Donald_Yates/134741