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How to Business Plan: What Every Small Business Owner Should Know
 

How to Business Plan: What Every Small Business Owner Should Know

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If you’re seeking funding from a venture capitalist, angel investor or other source of private capital then you will definitely need a comprehensive business plan that is well thought out and shows ...

If you’re seeking funding from a venture capitalist, angel investor or other source of private capital then you will definitely need a comprehensive business plan that is well thought out and shows sound business reasoning. Discover the top 10 reasons why you should have a business plan for your offline or online business.

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    How to Business Plan: What Every Small Business Owner Should Know How to Business Plan: What Every Small Business Owner Should Know Document Transcript

    • How to Business Plan - Top 10 Reasons How to Business Plan - What Every Small Business Owner Should Know I’m sure you’ve heard about ‘business plans’ but do you know the real benefits to having one? Not every entrepreneur who starts and runs an online or offline business begins with a business plan, but it definitely helps to have one. If you’re seeking funding from a venture capitalist, angel investor or other source of private capital then you will definitely need a comprehensive business plan that is well thought out and shows sound business reasoning. However, too many entrepreneurs believe that business plans are only needed when you require business capital or financing to launch your business. When it comes to the internet many entrepreneurs can start their business on a shoe string budget so in their minds ‘business plans’ don’t apply to them right? WRONG! Nothing can be further from the truth. It’s like building a home without using any plans or blueprint. Imagine believing that because you have all the materials, laborers, and tools needed to build a home you figure why do we need the plans? Let’s just start building away! A business plan is your blueprint that outlines every necessary component for the success of your business. Now for internet entrepreneurs how can you expect to build your business online without a plan? If you plan to build your business on the internet using social media marketing you’re going to need a plan? You’ve probably heard me say this ‘A sign of no business plan is a sign of no business’. Still not convinced? If you ever decide to approach a banker for a loan for your 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 you are approaching a bank Page 1
    • How to Business Plan - Top 10 Reasons for capital to expand the business, they may not require a business plan, but it will look much more favorably on your application if you do have one. Here are ‘10 Reasons Why You Should Have a Business Plan’ Supports a loan application To raise equity funding Define objectives and describe programs to achieve those objectives Compete in the marketplace (through an analysis of what your competition lacks) Make money from the start by devising an effective marketing strategy Provide a revenue estimate (by defining your market — who your customers will be — and the percentage of the market you can expect to reach) Define agreements between partners Set a value on a business for sale or legal purposes Evaluate a new product line, promotion, or expansion Determine whether your business has a chance of making a good profit What’s in a business plan? A business plan should prove that your business will generate enough money to cover your expenses, but a business plan may vary depending upon who your target audience is. If you are writing a plan for your associates and partners, for example, to expand an existing business, then the focus of that plan may be more on the operation side than it will be on the financial side. This plan would show your partners how the expansion will mean more revenues, but they are going to want to know the nuts and bolts of how this new venture is going to be implemented. If you are writing a business plan for a bank, your bank manager will want to see Page 2
    • How to Business Plan - Top 10 Reasons that your ideas are well thought out, but the most important aspect to him or her will be your financials. Are your projections realistic? And will the cash flow of the business be enough to ensure that you can make the monthly payments for the loan that you have requested? If your business is making $1,000 a month and your payments are $1,200 a month, the bank is likely to reject your application. When considering an investment opportunity, most venture capitalists will look at the obvious trends and market niches. The most important factor in a decision to invest in a company is the quality of the people. In real estate, the three biggest factors are “location, location and location.” The venture capital factors are “people, people and people.” VCs will ask, how experienced are the people that are going to run this business? Do they have knowledge of the industry? Have they started successful businesses in the past? I know it’s quite a bit to digest but are you seeing all the benefits to having a business plan? Excellent! What makes a successful business plan? Presents a well thought out idea Contains clear and concise writing Has a clear and logical structure Illustrates management’s ability to make the business a success Shows profitability Lets bring it all together… Your business plan is your business blueprint and like a calling card, it will get you in the door when you’ll have to convince investors and loan officers that you can put your plan into action. You want your calling card to look impressive, so make sure your business plan is printed out on good quality paper, you have checked Page 3
    • How to Business Plan - Top 10 Reasons the spelling and grammar and that your numbers add up. Anyone who sees errors while reading your plan will wonder whether you are going to make similar errors in running your business. A great business plan accomplishes two main objectives: 1) It provides you a blueprint for building your business including but not limited to product development, target marketing, operations, and revenue projections 2) Show bankers, venture capitalists, and angel investors that you are worthy of financial support. 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. About the Author Marco Carbajo is a business credit specialist, author, speaker, and entrepreneur. Want to learn more about how to build a winning business plan? Claim Marco's popular FREE '500+ Sample Business Plans'($597 Value),available at:=> http://www.bplans.com/?affiliate=nationalen Page 4