Finer Points of Business Planning


In this article, we are going to focus on some of the finer points as it relates to developing an appropriate business plan for a small business, a conventional business loan, a business grant, investment, an angel investor, and other forms of financing even use to get your business off the ground. As per our many of our previous discussions, we focused specifically on the nature of obtaining financing so that you can launch your entrepreneurial venture. However, in this article, and to further into the concept of producing a business plan that is fully appropriate for the acquisition of funding sources. Most importantly, we are going to focus on developing a business plan to focus specifically on the economic viability of the business that you intend to launch. It goes without saying that a business plan is not a sales document as it pertains to the product with service that you are selling. Your business plan is a sales document is to be shown to a funding source as to what brought you a venture that ultimately become profitable and cash flow positive. As such, usually taking very scientific approach as you develop your business plan so that you can effectively target the funding sources that you need in order to receive the capital you are seeking for the launch or continued development of your business venture. The most important aspect of business plan writing is to have an extremely well developed financial model that consists of a 3 to 5 year profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page that clearly showcases some of the more important aspects as it pertains to your business operations.

 

There are many standard formats that are used in business planning. However, let’s first start with the executive summary. In the executive summary, you create an outline of the overall business plan. Many people make the mistake of putting too much information into their executive summary as pertains to their overall business operations. When you're developing a full-scale business plan, the executive summary should act as a roadmap so that investors, granting firms, or other sources of capital can understand the nature of your business plan and how they can find the specific sections of information as it pertains to your overall business operations. In the executive summary, you should clearly express the amount of capital you're seeking, the kind of capital your seeking, an overview of the product or services that you're selling, an overview of the management of the company, a brief introduction to the anticipated financial results of the business, and a short paragraph that describes your future expansion plans after the first year of business operations.

 

The second section of your business plan should focus on the usage of funds and how your company has been established. First, you should discuss the type of entity that has been used in order to house your business operations. It should also information as it pertains to the state of incorporation for state of registration as it pertains to your overall business operations. Also include, within this section, a brief discussion of the anticipated terms of the capital that you intend to seek in order to develop or expand your entrepreneurial venture. This includes providing an anticipated interest rate for sale of equity to a third party as it pertains to whether or not you were receiving a business loan or capital from a private investor or angel investor. You should also detail, within this section of the business plan, how you intend to use the funds in a broad basis. This includes providing the information as it pertains to push a specific categories all the capital you're seeking will be relegated to as you progress through your business and capital raising activities. Finally, within this section should focus on how you intend to divest the business over a significant time frame once the company has reached its peak earnings capability. This includes outlining specific exit strategies that may include a private sale of the business to a third party, an initial public offering, for the sale of the business to a third party on a limited basis so that you can acquire additional capital to further fuel the growth of your business.

 

In the third section of your business plan you should thoroughly discuss the products and services they will be offering to the general public while concurrently showcasing each individual revenue stream that will be generated through your business activities. Business that sells a number of products, or have a number of different revenue centers, should specifically focus on each one of these issues as it pertains to the overall revenues and profits that will be generated from each of these segments of your operations. Additionally, within this section of the business plan, including information pertaining to general operations of your business including the marketing plan, plan, and general policy is evil and act as you progress through your business operations.

 

In the fourth section of the business plan will be to focus on the strategic and market analysis as it pertains to business. First, you focus on the overall economic climate in the United States and the specific jurisdiction in which your business will reside. This includes not only discussing the current state of the economy and general but also discussing the climate of the economy as it relates to a specific market that your business is operating within. Within this section of the business plan you should also include an in-depth industry analysis as it pertains to the specific nature of your business and have other businesses with it in your industry operate. Within this segment of the business plan you should also include important market trends as it relates to changes within your industry or changes in legislation that may impact the way you do business. The third section of your strategic market analysis should include a demographic profile of the average user or buyer of your product or service. This is especially important if you're operating on a local basis and need to complete a demographic analysis as it pertains to the local market in which you are operating within. It is very important to include within this section of the business plan issues that include, but are not limited to, the annual household income of the area that you're operating within, the median family income within this area, as the population and population density statistics over the past 10 years. In several of future articles will thoroughly discuss how you can obtain this information as it relates to your specific business. In the fourth section of your strategic market analysis should thoroughly examine the competition that you will continually face as it relates to your local business or if your business is operating a national scope the competition your face from very large corporations. Many investors and banks will have will want you to have focused on the competition that he would face as you progress through your business operations. Because without saying, but unless you have a highly proprietary piece of technology, that you can certainly anticipate that there will be other market agents that are often other products and services that are substantially similar to yours.

 

In the fifth section of the business plan you should really focus on how you intend to market your products and services to the general public. First, you should create a point outline of how you intend to all market your services to the general public. This specific topic should be known as the marketing objectives and should clearly define several aspects of the marketing plan that you intend to develop within your overall business plan. Following your marketing objectives, you should focus on the specific marketing strategies that you will use in order to target demographics that were discussed in the previous section of the business plan. In doing so, you should also focus on the specific costs that will be incurred as you engage in each type of market strategy. Very common market strategies as it relates to the marketing of businesses include the usage of the Internet, books, print advertising, television advertising, radio advertising, social networking, and many other types of viral marketing strategies that will make your product or service more aware to the general public. Within this section, in finality, you should focus on the specific pricing that you intend to offer to your customers not only at the onset of operations but also as you continue to progress to operations over time. If you offers several thousands of products, you can aggregate the average price and average gross margin that will be achieved through the sale of these products and services in a categorical nature of concurrently providing, in a separate document, a specific pricing listed for each individual product that you sell.

 

In the sixth section of the business plan, you should focus on the personnel summary as it relates to the number of people that you intend to hire through your business while concurrently showcasing their anticipated costs as it relates to their employment. Within this section, you should also include the applicable resumes and biographies of the senior managers and owners so that the company's debt or an investment firm or financial institution has a clear understanding of your background, as well as the background of your partners, as it relates to the management of the day to day operations of your business.

 

In the final section of your business plan, you should develop your three year to five your financial model that, again, showcases a profit and loss statement, cash flow analysis, a balance sheet, a breakeven analysis, and other commonly used metrics that are needed to be seen by investors for banks in order to render a fair lending or investment decision. This section the business plan, it goes without saying, is the single most important aspect to the operations of your business. As we have discussed time and time again, is imperative that you clearly show to any potential funding source that you have an economically viable business that you are developing work standing. The best way to do so is through the development of a well developed financial statement that clearly anticipates the costs anticipated revenues they generate over a three year to five year time frame.

 

Following the formal financial statements that you intend to provide a third-party investor or financial institution, you should develop additional financial statements that showcase the month to month profit and loss statements and cash flow analysis for the first year of your first year of your business operations while providing quarterly financial statements for years three, four, and five. While it is not always a for demanded by investment firms and financials institution, you will make yourself a much better candidate for financing if you are able to provide a clear understanding of how you intend to initially launch the operations, its anticipated revenues during its early operations, and how you intend to repay an investment bank capital that you may receive as it relates to your ongoing business activities.

 

In addition to having expanded financial model, on top of your formal financial model, you may want to include other information as it pertains to the risks associated your business, the opportunities as you can continue to pursue as you progress through your business operations, as well as a list of reference sources that were used in conjunction with the development of your business plan.

 

In conclusion, you and your company will be a tremendous candidate for investment financing or bank financing if you are able to develop and well-prepared business plan. In many of our future discussions, will continue to further drill down how you can further discuss specific aspects of your business that need to be reviewed by any particular funding source. We strongly recommend that you continue to view the articles that that we will continue to develop as it pertains to general business financing and business planning so that you can effectively develop a business plan that is appropriate for the specific funding source they were targeting. Of course, and as we discussed many times before, if you have any trouble developing a business plan that we strongly recommend that you consult with a business planning firm or a certified public town that can actively assist you in developing this very complex business document. We thank you again for tuning into the business to TheFinanceResource.com, as it pertains to your business planning needs, and will continue to provide you with insightful information as it relates to obtaining funding of concurrently developing an appropriate business plan for each type of funding source that you may target to your capital raising activities.


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