The business plan or the feasibility study of a business is the key to your banker’s wallet. If you plan to borrow money to start your business, it would be wise to write down your business plan first. Lenders want to know what you are going to do with their money, among other things. Makes sense right?
Even if you plan to use your own capital, it is wise to write a business plan. Your business plan gives direction to your business. You would like to know where you are headed with your money. Right?
Writing your business plan serves as a framework, a master plan, and a road map to success for your business venture. Never trust your memory to keep track of every detail there is when launching your business. A written plan is easier to understand and assess objectively.
In business plan writing, there are no formats or standard outlines used. Basically, a good business plan contains pages that answers the questions: who, what, where, why and how.
It can be quite costly to ask for a professional help in writing your business plan. One way to cut costs is to make use of your local college libraries. There are books on how to write a well written business plan, feasibility study, marketing plan, etc. There might even be college or graduate school level theses or feasibility studies on a business similar to yours in the library.
Another way to cut costs in writing a business plan is to approach graduating students from business schools or MBA. They are required to present and defend a feasibility study or a business thesis. Explore this avenue and suggest that they do one for your business to fulfill their course requirements. Offer them to provide all information needed and don’t forget to treat them for some snacks or food after as a gratitude.
Do not worry if you wrote your own business plan. As long as it is readable and can be easly understood by the banker or venture capitalist, the business plan is good enough. Besides, if it lacks information or data, they will surely ask you to provide it later. Keep it simple yet concise.
I have a friend who works part time in writing business plans and feasibility studies. Below is a suggested business plan format or outline that can be use as your reference.
BUSINESS PLAN FORMAT
1. The Title Page and Table of Contents (with page numbers) – It usually contains information such as your company name and the word “business plan” or “feasibility study” after it as your title and the table of contents of your business plan with page numbers like that of a book.
2. The Executive Sumary – It contains information such as the description of your business, the industry where your business belongs, and the type of company you’re setting up.
3. The Management Team and Key Pesonnel – List down all the profiles of key decision makers of the company. Include information such as their educational background, positions held in the past, companies worked for, and other achievements.
4. Description of the Product or Service – Describe the products or service of your business. List down its uniqueness and advantages against other competitor products currently in the market.
5. Market Research and Analysis of Product or Service – This contains information that details the profitability of your business products or services. Questions you might need to answer includes: What makes your product in demand in the market? Can it survive competition? Who are your potential clients?
6. The Marketing Plan of the Business – Discuss here the different marketing strategies that you plan in your business to drive up sales and revenue. Make sure that you can come up with effective yet cost efficient marketing ideas.
7. The Manufacturing Schedule and Production Plan – Also put in detail your production schedule. This will vary according to your clients’ needs and it usually involves businesses with huge inventory. It’s a plan to balance supply and demand. Too much supply with less demand will lead to losses. Additionally, too much demand with less supply will lead you to lose your clients. Take note also for the expiration dates of perishable products such as foods if you plan to have this business.
8. Financial Plan – This is one of the most important parts of the business plan. It includes data such as balance sheet and income statement, sources and applications of funding, break-even analysis, income statement projections, cash flow projections, historical financial reports for existing business and projected financial statements for new business, financial ratio analysis, investor or lender projected returns, and how investors can get out of the venture. Additionally, you can add optional details such as personal budget and living expenses of the owner, salaries to be drawn by the owner from the business, and personal statement of assets and liabilities of the owner.
9. Risk analysis – All businesses have risks and you can potentially lose some or all your money. In doing risk analysis, describe here the details that can threaten your business and can potentially lead it to losses.
10. SWOT Analysis – SWOT analysis means understanding your business’ Strengths (S), Weaknesses (W), Opportunities (O) and Threats (T). I’ve written a separate article before about SWOT Analysis that you might want to take a look at.
11. Purpose or Use of Loan Proceeds – Identify where do you plan to use the loan proceeds with their respective amounts. Will it be use to pay salaries of employees, to pay for utility bills, to pay for rental fees, etc.? If so, then how much is the allocated budget for those?
12. Summary – Briefly summarize your important points regarding the profitability of your business as a whole discussing the potential income it might generate.
13. Appendix or Supporting Documents – At the end of your business plan, you can include several supporting documents with regards to your business such as resumes of officers, tax returns, business registration papers, business location map, product pictures, office layout, list of clients, survey results, etc.
Some of you might say that there are some redundant information in the sample business plan format mentioned above. As I have said, there are no standard business plan formats or outlines. The business plan format written above is just for your reference.
When your business is already operating, always keep a copy of your business plan handy. Refer to it from time to time. When new information or data comes in, don’t forget to update your business plan.
Compare your actual results with your financial projections in the business plan on a yearly basis. Make an analysis between target and actual performance. Update your financial projections given the results of the preceding accounting period. In this way, you can assess your business developments and can think of ways of how you can further improve it.
If you have new partners or vital employees in your business, the business plan will be a good tool for them to start learning the business.
Your business plan, no matter how simple or comprehensive, should always be kept in a neat and secure place. It is your plan to become wealthy.