Business: How To Make A Business Plan

A guide to making business plans to present to potential investors.

Whether you're starting a new business or simply trying to find financing to expand an older one, a business plan is essential. It shows your potential investors that you know where you are in relation to the market and the competition, and that you know what it will take to get ahead of the game and make them a profit on their investment. Unfortunately, drafting a business plan can seem like a daunting task... at least at first.

The first step in creating a business plan is doing your homework. Research national trends in relation to your business, find out who your competition is and what they're doing, and figure out the smallest amount that you can get everything done on. Once you have all of that information, it's time to get started on your plan itself.

What follows is a bare-bones outline of a typical business plan. Each section is listed more or less in order of appearance, and contains a listing of the sort of information it needs to contain. Keep in mind that this order isn't set in stone; it's your business plan, so if there are items that need to be brought forward or pushed back, feel free.

Executive Summary: 1-2 pages giving an overview of your plan as a whole. Don't go into extreme detail here, since everything will be covered in the pages that follow, but make sure that you get the point across. You'll probably want to write this part last.

Industry Analysis: A basic overview of the industry you'll be competing in. Topics to cover include industry opportunities, trends, and any major competition.

Market Analysis: Much like the Industry Analysis, but dealing with your local and regional market. Again, be sure to cover opportunities, trends, and all local competition.

Business Description: Tell everything that you can about your business without getting overly technical. Tell how long your business has been in operation, the legal structure, who the owner/owners are, short and long term goals, and any current needs. Don't worry about going too in-depth on employees here; that will be covered in another section.

Competition: List information about all local and major competition, as well as ways in which your business provides superior products or services. (You'll want to show that consumers will pick your brand over "Brand X".)

Marketing Plan: List current customers, as well as potential customers, and show what your company's draw is to the consumer. Elaborate on your strategies for pricing, distribution, and promotion so that investors can see how your products or services will get into the hands of the consumers.

Operations: This section is more important for manufacturing industries than it is for service industries, since manufacturers need to describe equipment and processes that they use. This section should also contain information on how your business is being run, what departments (if any) exist as well as what they do, and any plans that may be in place for business expansion.

Organization: This is where you put information and background for your top level of management, as well as charts showing how your employees are organized across departments and details about adding to or reducing staff.

Financial Needs: This is where you've got to show your investors that you know exactly how you'll be using their money. Detail the total amount needed, showing how it will be used as well as why your plans are the best way to use the money allocated.

Financial Statements: This shows potential investors that you know how to handle money for your business. Include income statements and balance sheets from the past several years (unless, of course, you're writing this for a new company.) Also include projections and anticipated cash flow for the next 5 years (broken down into monthly increments for the first 3 years, and then quarterly for the remaining 2.)

Appendix: Any information that you used for reference, or that was not specifically addressed but should be considered needs to be included here.

Of course, be sure not to gloss over bad points or paint a false picture with your statements... when dealing with other people's money, you don't want to mislead or deceive them. That sort of thing could find you in court before you know what's going on. Be honest, and show that you know what you're doing.

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