Many people think that if they are not applying for finance from a financial institution that they do not require a business plan. Nothing could be further from the truth. The financial institution requires the plan in order to understand where your business is going and analyse if it is a long term prospect for them. You need to do this for yourself first and foremost. If you intend to be successful and exploit any business opportunity than the business plan is the mot critical tool you will use.
Writing the business plan will involve:
• Creating a Mission Statement
Where is your business going? How are you going to get there? Define your business in a short paragraph.
• Decisions on business strategy
Where does your business stand now? Where do you see yourself in the future? What are the obstacles that stand in your way? What strengths do you have? What opportunities are out there that you can leverage to your advantage?
• Marketing
Who are your customers? Where are they? What identifies them? How do you get to them? What are they willing to pay for your product or service? Can you earn money at that rate?
• Products and or services
What products or services are you going to develop? Are they Unique? How much will they cost? How do you get them to your customers? Are there any special licenses required?
• Employment
How many employees will you need to provide this product? What kind of structure will you need? What will your position be? How will you handle training? How will you handle employment law?
• Legal structure (Corporation?)
Do you need to register as a corporation? Is an LLC OK for your business? What turnover do you project? How much paperwork are you willing to handle? What state will you register in?
• Tax
State taxes? How much profit will you make? Who will deal with taxation?Will you employ and accountant?
• Accounting
Depending on the corporate structure what records will you need to keep? Will you have a full time bookkeeper or accountant? What software package will you use?
• Premises
What kind of premises is required? Offices? Factory? Does it need to be in a center? Close to rail, road or air networks? What rate is your type of property going for? Will you rent, lease or buy?
• Financing
How much set up funding do you require? How much ongoing funding do you need? Will this cover unplanned emergencies? How much can you put up yourself? What other sources will you look at financial institutions, friends, family, partners, venture capital?
• Budgeting
Every cost needs to be nailed down and broken up into monthly budgets? How does this compare to industry averages? Can you attain these budgets? Who will be responsible for keeping the business within budget.
• Cash-flow statements
How much cash is coming in/out? When is it coming in/out? How much of it is yours (tax)? Can you cover shortfalls? How much leeway for creditors and debtors.
• Help
There is always help at hand. Do plenty of research and don’t be afraid to ask questions both of yourself and of your business. You will regret it later if you don’t.
