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Profile & Quiz How to Write
a Business Plan
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Why Write One? Regardless of the type of business you choose, you will eventually need to "sell" its merits to potential clients, suppliers, investors and the business community. A business plan is the cornerstone of your initial marketing efforts. It is a comprehensive document that: a. precisely defines what your business does To evaluate the viability of your venture, potential investors and suppliers need a thorough understanding of how you will manage your operation, handle your finances, promote and market your product (or service) and achieve your objectives. In addition to the requisite financial data (a current and pro forma balance sheet, an income statement and a cash flow analysis), your business plan must also include an analysis of the market place, including how your firm will position itself against current and future competitors. Although most fledgling entrepreneurs consider writing the plan to be a huge chore, it is actually a valuable exercise, as it forces you to consider every aspect of your business before you invest a single dime. A well-written and thought-out business plan is a guideline that helps you plan all aspects of your business; it enables you to allocate resources properly, handle unforeseen complications, and make good business decisions. If your venture requires outside funding of any kind, a business plan is a necessity, as it explains how you will repay any money that you borrow money. Additionally, it informs other critical third parties (sales personnel, suppliers, employees) about your operations and goals. In this respect, your business plan is a critical marketing document that summarizes your ability to meet your professional objectives. Despite the importance of a business plan, many entrepreneurs drag their feet when it comes to preparing one. They argue that their marketplace changes too fast for a business plan to be useful or that they just don't have enough time to write everything down. This is always a mistake. At this stage of development, a savvy business owner must think like a builder; neither can comfortably begin their projects without a reliable blueprint. In the case of the builder, his blueprint comes from a certified architecht, who defines the parameters for the building. For the small business owner, his blueprint for his new venture is his business plan, which summarizes his firm's goals in the context of the competitive marketplace. By putting his thoughts in writing, an entrepreneur can identify potential problems and opportunities that he might otherwise have missed. In hindsight, successful business owners invariably find that the rewards of writing a business plan far exceed the perceived risks.
Getting Started: Plan Your Work Before you begin to write your business plan, stop and consider five basic questions: 1. What service or product does your business provide and what needs does it fill? 2. Who are the potential customers for your product or service and why will they purchase it from you? 3. How will you reach your potential customers? 4. How much will it cost to start the business and operate for one year? 5. Where will you get the financial resources to start your business? Your specific answers to these questions will determine the content of your business plan. As many entrepreneurs have discovered, the answers are not written in stone and will often change over time. Thus, in your planning stage, your priority must be conducting painstaking research into every aspect of the five questions. The more you know about your potential market, client base and competition, the better you can position your own firm for success.
Writing the Plan Although there is no single formula for developing a business plan, it must provide a thorough description of your business, your marketing plan, your management background and your financial plan.
1. General Information Business name, names of owners and the business address 2. Business Description a. History and nature of the business - details of what kind of business it is, its age, number of employees and current business assets b. Ownership structure - details on your company's legal structure 3. Management Profile Develop a short statement on each principal in your business, provide background, education experience, skills and accomplishments. 4. Market Information a. Clearly define your company's products as well as your markets. 5. Financial Information a. Financial statements - balance sheets and income statements for the
past three years. If you are starting out, provide a projected balance
sheet and income statement.
A Typical Outline Here is a typical outline for a business plan: I. The Business A. Description of business II. Financial Data A. Loan applications III. Supporting Documents Tax returns of principals for last three years Personal financial
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