A good business plan should set out how much money you want and what you are going to do with it. Naturally, in order to be considered for a loan or a grant, the lender also needs feel safe about their investment. This is accomplished by helping them understand your business and how you are going to make it profitable. You will also need to describe your business, place it within the context of the industry it is a part of, examine the marketplace and provide detailed financial information about your business.
When planning on submitting a business plan, see things from the lenders perspective. What will they want to know? For example, in one line, describe your company in your executive summary, how does money flow in and out of your company, what are the mitigate risks if they invest and why are y0u uniquely qualified to succeed? Like I said, see things from the lender perspective and include the information that they expect to see. There is no point in investing hundreds of hours providing details that are not relevant or failing to include the necessary information. This shift in perspective from what you see to how they see it should be your starting point.
A good business plan should include the following sections:
- Cover Page -- MS Word 2007 and later includes a feature to add nice looking cover page to any document. Check it out. Using the company colour scheme, be sure to include the company name, logo. Be sure to include the words Business Plan and when it was written including the month and year unless you are doing revisions. These last two should be less prominent (smaller and near the bottom).
- Title Page -- This page should include the words CONFIDENTIAL BUSINESS PLAN in the header at the top of each page. It should also state your company name, "Copy prepared for:" and the name and/or company for whom it is prepared as well as the date it was prepared. At the bottom, include your full business contact information including Company name, address and telephone number. In fact, your company name should be included in the footer at the bottom of each page along with page numbering in the form of "Page X of Y" in case a page should end up missing for any reason.
- Table of Contents -- Use Microsoft Word's Table of Contents feature to generate it. It will create the table of contents based on the top 3 levels of headings used throughout your document. Don't forget to update it before submitting your plan.
- Executive Summary -- This includes your objective (the amount of money you want) and what you are going to do with it (how it is going to increase your profits or the value of the business). It is optional as to whether you include the following Business Overview in this section or keep it as a separate section.
- Business Overview -- Briefly describe your business (what does your business does and for who), your services, your short-term and long-term goals, and your projected income. Do you primarily do business-to-business or sell retail to end consumers?
- Products/Services -- What is the gap that your business fills? What is it that you sell, why do people need or want it?
- Industry Overview -- Some things to think about include the size of businesses in the industry, the volume of your sales in the industry and the total sales in the industry, any legislation, regulations, and standards that apply to the industry's services, trends in the industry, the main challenges and problems the industry faces and finally the future of the industry. Finally, how does your business fit into the industry?
- Marketing Strategy-- Identify your target market(s) for your service(s) and estimate what your portion is of the total market? What are your marketing strategies (prices, business promotion)? What are your planned methods of selling your products? What is the location of your business (if it has an impact), what is your business image, what is your advertising message, what is your public relations plan (if any), what is your sales strategy and how do you plan on finding and keeping customers. You will also need to be able to name your main competitors in your target market (not all your competitors) and how you plan on beating them. Describe similar products/services offered from these competitors and explain why customers will buy these products/services from you instead of from your competition. If you can't do this, you won't get the money.
- Operations Plan -- How does your business run? Start with basic contact information, the type of business (sole proprietorship, partnership or corporation), descriptions and pictures of your logos and designs and a brief history of your business including the date your business officially started. You will also need to talk about who is running the business, a copy of your CV or Resume showing that you have the relevant business and/or work related skills. It should also list relevant courses or workshops you've taken including those on setting up and managing a business. Who are the key employees of your business, professional advisors of the business (lawyer, accountant, publicist and advertising firm) and people already investing in your business, if any. Finally, be sure to describe your facilities, equipment, materials and inventory you already have on hand which enable you to run your business.
- Financial Plan -- This is the section where you are going to show that you've got a good chance of making a profit or at least paying back the loan. How much money will you need to get up and running, what the company's and your assets and liabilities are and the projected profit of the business. If your company is a startup, you won't be expected to provide a balance sheet for proceeding years. If it isn't a startup, you will need to include this information for the preceding two or three years. You will also need to describe what your projected expenses will be and how the money will be used.
- References -- As a final touch, I recommend that you include a list of references so that the lender can get an idea of your businesses reputation and your personal reputation. In addition to contact information, you could also include testimonial/reference letters from people you have dealt with both professionally and personally. Be sure to clearly identify how they are a reference. I would also suggest you contact each individual both to ensure that the contact information you have on file is accurate, to get their permission to be a reference for you and to confirm what they might say about you.
DON'T MAKE THIS STUFF UP! If you do, it will make you look light-minded and untrustworthy. It helps your credibility if you include the source for any factual information or opinions in footnotes. If they want more information, they should be able to locate your references. Think about this. It is very likely that they have reviewed many business plans. What are the chances that they won't already be familiar with at least some of the information you will be providing? It would reflect poorly on you if they spotted inconsistencies in your supposedly "factual" information.
ALWAYS BE SURE TO INCLUDE a statement of copyright, intellectual property and confidentiality. Depending on the information, you may even want to have them sign a non-disclosure agreement. After all, you are about to share some very sensitive information about yourself and your business in this document.
There are many books and Internet resources available on the subject of business plans.
The financing you are hoping for will depend on the quality of the information you include. To improve your chances of success, do your homework first and then invite people in your trusted circle to review your business plan before you submit it. If you can, work with the potential investor as you develop your plan so that it meets their needs and includes the information they will be looking for.
Additional Information you might find useful:
- TD Canada Trust: Business Planner
- Canada Business Network: Writing Your Business Plan
- Canada Business Network: Sample Business Plans and Templates
- Market Research and Statistics
Be sure to also check to see if your provincial or state government has similar tools to offer through their websites.
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