ArticlesBlog

The Essence of a Business Plan and Why You Need One

The Essence of a Business Plan and Why You Need One


Hello, I’m Eugene Cornelius, Deputy Associate
Administrator for the Office of International Trade at the U.S. Small Business Administration. I am here to detail the workings of a business
plan. A business plan tells you where your business
is in its life cycle and where your business is going. It tells your Bank, Lenders and Investors
just how financially and economically feasible your operations are and most importantly it
outlines how you plan to pay back any loans, obligations, and return on investment. A traditional business plan has nine parts. You may prefer a traditional business plan
format if you’re very detail oriented person, or want a comprehensive plan, or plan to request
financing from traditional sources. When you write your business plan, you don’t
have to stick to the exact business outline. Instead, use the sections that make the most
sense for your business and your needs. In section one, Executive Summary, briefly
tell your reader about your company and why it will be successful. Include your mission statement, your product
and service, and basic information about your leadership team, employees, and location. Include financial information and a high-level
growth plan, if you plan to ask for financing. In section two, Company Description, use this
section to detail information about your company. Remember, details are key. Explain the problem your business solves. Be precise, list out the consumers, organization,
or businesses your company plans to serve. Explain the competitive advantage that will
make your business a success. Are there experts on your team? Have you found the right location? Here is where you boast about your strengths
of your company. In section three, Market Analysis, you will
need a good understanding or your industry outlook and target market. Competitive research shows you what other
businesses are doing and their strengths. Look for trends and analyses. How do they succeed? What makes them successful? Can you do it better? These are things you want to outline. In the Organization and Management section,
you want to tell your readers about your structure and who will run your operation. Is it a legal corporation? These are things that are key and vital to
explanation of how you will/plan to establish your entity. Show how each person’s unique experience
will contribute to the success of your venture. In section five, Service or Product Line,
describe what you want to sell and the service you have to offer. Explain the benefits to your customers and
the product lifecycle and what it looks like. Point out things like copyrights or intellectual
property. In section six, Marketing and Sales, there’s
no single way to approach this strategy. Your strategy should evolve and change to
fit your unique needs and goals of this section. Describe how you’ll attract and retain customers. How you plan to scale your business. Make sure to be thorough, describe the complete
marketing and sales strategies because you will refer to it later when making financial
projections. In section seven, Funding Request, if you’re
asking for funding, this is where you’ll outline your funding requirements. Your goal here is to be clear. Explain how much funding you’ll need over
the next five years and what that funding will be used for. In section eight, Financial Projections, you
want to simplify your request for funding. Your goal is to convince the reader that your
business is stable and will be a success. If your business is already established, here’s
where you include income statements, balance sheets, and cash flow statements for the last
three to five years. If you have other collateral you could put
it here against the loan, and make sure to list it. This is a great place to use graphs and charts
to tell your financial story. Finally, section nine the Appendix. Use the appendix to provide supporting documents
or other materials that were specially requested or common. These include are credit histories, resumes,
product pictures, letters of references, licensing, permits, and any legal documents you may provide. For details on any of the nine outlined sections
I have just mentioned, please refer to SBA’s Small Business Resource Guide. And remember, here at SBA, we have counselors
and trainers available to assist you every step of the way at little to no cost. Simply go to www. SBA.gov and locate your local District Office
for assistance. We wish you well in your success!

Comment here