Business Plan Basics

The best way to show bankers, venture capitalists, and angel investors that you are worthy of financialsupport is to show them a great business plan. Make sure that your plan is clear, focused and realistic.Then show them that you have the tools, talent and team to make it happen. Your business plan is likeyour calling card, it will get you in the door where you'll have to convince investors and loan officers thatyou can put your plan into action.Once you have raised the money to start or expand your business, your plan will serve as a road map foryour business. It is not a static document that you write once and put away. You will reference it often,making sure you stay focused and on track, and meet milestones. It will change and develop as yourbusiness evolves.

Not everyone who starts and runs a business begins with a business plan, but it certainly helps to haveone. If you are seeking funding from a venture capitalist, you will certainly need a comprehensivebusiness plan that is well thought out and contains sound business reasoning. If you are approaching abanker for a loan for a start-up business, your loan officer may suggest a Small Business Administration(SBA) loan, which will require a business plan. If you have an existing business and are approaching abank for capital to expand the business, they often will not require a business plan, but they may lookmore favorably on your application if you have one.Reasons for writing a business plan include:
Support a loan applicationRaise equity fundingDefine and fix objectives and programs to achieve those objectivesCreate regular business review and course correctionDefine a new usinessDefine agreements between partnersSet a value on a business for sale or legal purposesEvaluate a new product line, promotion, or expansionWhat's in a business plan?A business plan should prove that your business will generate enough revenue to cover your expensesand make a satisfactory return for bankers or investors.

1. Executive Summary--features the highlights of your plan and sells your idea in two pages or less.
2. Company Summary--a factual description of your company, ownership, and history.
3. Products (or Services or both)--describes your products and/or services and how they stand outfrom competitive products and services.
4. Market Analysis-provides a summary of your typical customers, competitive landscape, marketsize, and expected market growth.
5. Strategy and Implementation-describes how you will sell your product, how you will put your planinto action, and establishes milestones.
6. Management Summary-provides background on the management team, their experiences, and keyaccomplishments.
7. Financial Plan-contains key financials including sales, cash flow, and profits.8.