What a Business Plan Can Mean To You
Small Business Tips

A business plan is designed at the beginning of a new venture, either from scratch or a pre-existing model. Those designed internally are usually as formal as need be, based on the companyís politics. They probably wonít have the same sections as a business plan for a new business, and will only be as complete as the firmís managerís request.

Most plans are created by people who have never started a business. In this case, the main purpose is to sell the idea to potential funderís, family, friends, angel investors, or banks. Another important purpose is to bring forth problems and opportunities to the entrepreneur. When writing the plan, the entrepreneur has to refine their strategy to funders, understand the market opportunity and learn the capital investment needed.

What do Funders Want to See?

The reason for the business plan is get more cash for the entrepreneur from the funder to start the business. The plan should include all the information that funders need to research the business and assess the potential investment or loan risk. The start-up costs get understated to show how funding will be allocated. Included should be projected financial statements for the funder to understand the profitability and liquidity of the business in the future. The plan also needs some explanation of opportunity in the market, the management teamís credentials, and any upcoming operations or marketing activities.

A Business Plan is Not ...

The plan is not where you pour out a document of ideas and suggest that the management team will implement them all. There are some strategies that should come from the managers, even if it is early. Funders want to know that you can make decisions, and that your managers can go in a certain direction and move their marketing and operations to coincide. Options are also there to show the need for more management, if need be.


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