If you want to seek financing to start your own business, you first need to prepare a solid business plan. A business plan is the pulse of your company, and your business plan’s individual components comprise the structure of your business.
A business plan has some key sections: executive summary, business offering, marketing plan, operations/strategy, management team, and a financial plan.
Executive Summary: This is a detailed summary of what you are trying to accomplish (mission statement) and an outline of how you are going to achieve your goals. The executive summary is usually one or two pages long.
Business Offering: Discuss why you are in business and your role in the marketplace. Address how you will provide goods or services to your customers as well as how you will keep up with innovation and trends in the future.
Marketing Plan: Begin by sharing your market-research results, and be sure to identify how you understand your customers. Discuss why you will be successful, and define your marketing strategy.
Operations/Strategy: Include your company’s core values and proposition statement. Discuss how you will do business and how you will measure success. Define your baseline metrics and goals for the next few years.
Management Team: Discuss your board members and their backgrounds. How do members of your management team work together? Why would individuals want to do business with your team?
Financial Plan: This includes your balance sheet, income statement, and your statement of cash flow for at least three years. The numbers will drive your future.
Within the key sections, it’s important to be very detailed because the business plan is your communication tool to potential investors. You need to prove that you really understand the market you are entering, that there is a potential for profit, and that your cash flow will exceed your expenses.
If you don’t create an in-depth financial plan that outlines your proposal for lenders, you may find it difficult to achieve the initial funding or the future financial success you desire. Lack of planning could lead to new-business failure in the first two years.
A business owner can use a business plan to define goals and organize strategies as to how the goals will be achieved. Investors or financial institutions will refer to the business plan to challenge the business owner on his vision for making his company profitable.
Keep in mind that a good business plan is flexible, because you will most likely review and revise it as your business grows.