Your roadmap to business success.
Now, more than ever, a well thought out business plan is seen as a necessary tool to build a viable business. Whether you are seeking financing from a lender or planning to approach the Small Business Administration for a loan guarantee, a well thought out plan of action is essential in presenting the formalities of the proposed business. In today’s highly competitive marketplace, a formal operating plan can mean the difference between success and failure.
What is a business plan?
Simply put, a business plan is a written statement that describes how you intend to operate your business in the future. While most new business owners have a general idea of how they want to run their business, those intentions are generally not formalized. As the business grows and new challenges emerge, the owner often needs to involve others in the business. This is a time when the owner is under pressure to formulate a plan for future growth. Unfortunately, this time frame offers the least amount of time for planning.
The following are good reasons for developing a formal business plan.
A roadmap to success
Very few entrepreneurs achieve their goals without first formulating a well thought out plan of action. Any responsible entrepreneur will take the time to register their expats for business. Good planning ensures preparation for the future, thus reducing challenges to their lowest denominator. Reducing challenges means less risk and a greater chance of success. It makes operational sense to plan ahead when time, money, and resources are at risk.
Predefined checkpoints to measure progress on goals
Just as a traveler sets out on a journey and plans when to reach their destination, a business plan also serves as a guide for the journey. With a business plan in hand, an owner can establish checkpoints at which progress can be measured and adjustments made. As each step of the business plan is achieved, an assessment is made. More funds can be requested for physical expansion, equipment upgrades, or more employees. As each goal is met and a cycle of activity is completed, it signifies the beginning of new goals. New objectives mean an extension or reevaluation of the plan.
The business plan is a vehicle to involve others in entrepreneurship
Even if there has been no need for employees, a solid business plan sets the stage for attracting new people to the company. This ensures that everyone understands the business objectives and what is expected of them. Too often, the owner thinks he can switch with his small workforce only to find that his employees don’t understand the overall plan. A business plan provides the direction necessary for everyone to stay on the same path. The planning process also helps in expanding the achievement of objectives to employees and reduces the possibility of unscheduled crises.
The importance of developing a loan application
The lending institution will require a good business plan before it can obtain financing. Evan, if you want to apply to the Small Business Administration, a lending institution must first approve the loan. The SBA will guarantee the loan up to 80%, but the lender will still need a proof of capacity. The question is, are you capable of running a business? The lender will ask for proof of experience, collateral, and a statement on how you plan to repay the loan if the business fails. Even if the lender is a friend of yours, your relationship is strictly business, requiring guarantees of repayment. You must provide them with reasonable assurance that you know what you are doing and how you plan to do it.
The business plan provides:
An image of past experience
A plan for the future
Clarify financial needs
Identify potential threats and provide reasonable solutions
Serves as a communication tool
Sets the direction and establishes the objectives of the company.
Don’t take anything for granted. Be prepared for anything that may happen before it happens. Putting it off until something happens will cause a disruption in your ability to preform. All sections of the business plan must be considered. First establish your legal description, name, product or service and logo. Then find a good location and put everything together with your Business Plan.
These are some of the things that a business plan should contain.
A. Description of the business
Form of ownership
Products or services offered
History of past experience
What is the niche served
Niche need – demand
Service product longevity
C. Administration / Personnel
A. Pro forma cash
Detail by month of the first year
Detail by quarter, second and third year
B. Proforma balance sheet
Income projection (profit and loss)
Detail by month, first year
Detail by quarter, second and third year
D. Financing requirements
E. Insurance requirements
All expatriations should be taken into account when writing a business plan. One-year, five-year and ten-year project. Divide each segment into its lowest denominator. If you want to earn x amount of dollars, how many sales will it take and what will each sale consist of? Find the answers and write them down on paper.
Plan to be productive and successful. Contemplate each and every possibility, good or bad. Consider the “what if” factor. Seek professional advice and don’t fall short. Being self-employed is not for the faint of heart. It is a difficult road to take. You will have to work hard, spend long hours, and endure many rules and regulations. It is not the answer if you are looking to break free from an employer. Self-employment will take away your energy, but if you planned it well, you will be able to spend some time with the family after a few years.