A great business plan can only get your business so far, but having the business capital to go along with that business plan can bring your business to new heights. It can also go the other way as a great plan is the first step to obtaining the capital you are seeking for your business.
Failing to plan your business properly can put your business in with the 90% of businesses that fail. Developing a business plan is hands down the most important step any business can take if they want realize true success. The business plan will be used by potential lenders or investors to determine where your business is going and how you are planning on getting there. A well written business plan will assist you greatly when you are seeking financing. Both lenders and investors look at your business plan differently. The lender is mostly concerned with whether you can repay the loan, and the investor wants to know how far you can take the business to maximize their potential earnings on the investment.
The first, and probably most important, part of your easy business funding plan will be the Executive Summary. This is where you grab the attention of the lender by providing an overview of your product or service, the market, your niche, the management, the mission, company structure, funding amount requested, use of funds, the proposed terms, and collateral offered. The lender or investor will not look at your business plan further if you don’t grab their attention with the Executive Summary.
The next item you will need to include will be a narrative, which is also known as an “elevator pitch.” A narrative simply defines what your company does in 20 seconds or less. Include the history of your business and your idea next. The reader needs to know a little bit about the history of this idea before they pour their money into your business. Try and answer the 5 W’s here; who, what, when, where, and why and it should assist you greatly when completing the history section.
A one sentence mission statement will follow. This is where you talk about what your business is about in one sentence. It’s important to not go quickly through this mission statement, as it gives your business a unique identity, so you need to make sure you do a great job with it. The stage is the next section of your business plan. This is where you discuss where you are at in the process of obtaining business funding.
The market niche section gives you the opportunity to show which niche your business is exploiting. You will want to disclose information on what sets you apart from the competition. This part will need to be very detailed to help the lenders and investors learn as much as possible about your business. Next to follow in your business plan will be a market research report. In this section you will do research to back up your claim that there is a need for your product or service. The financial overview is next. In this section you will include information including what your gross sales, net income, net worth, etc. should be in years one, two and three. This is just an overview and later in the business plan you will provide more accurate projections.
This will give you plenty of information to get you started on putting together a business funding request. In my next article I will cover some of the other aspects of your business plan. For a full version of an excellent business funding guide do a search on Google, Yahoo, or MSN for “Business Funding Workbook”.