How to Develop a Results Driven Business Plan

There are many reasons why a business plan should be prepared. Each is sufficient by itself for why one must go through the exercise of preparing the actual business plan. This guide discusses free small business plans, business plan outline. Regardless of the specific reason, the underlying goal of preparing a business plan is to insure the success of the business. Here are the main reasons why a business plan should be prepared:

Provides you with the road map that you need in order to run your business. It allows you to make detours, change directions, and alter the pace that you set in starting or running the business.

To assist in financing. Whether one is starting up a small business or is an entrepreneur, banks and financial institutions want to see that you know where you are, where you are going, and how you are going to get there.

The plan will tell you how much money you need, when you will need it, and how you are going to get it. In other words, how you will do your financing?

Helps you to clearly think through what type of business you are starting, and allows you to consider every aspect of that business.

Raises the questions that you need to have answered in order to succeed in your business.

Establishes a system of checks and balances for your business so that you avoid mistakes.

Sets up bench marks to keep your business under control.

Helps you develop the competitive spirit to make you keenly prepared and ready to operate.

Makes you think through the entire business process so that you do not open the business blindly or lack vital information in opening and maintaining your business.

Forces you to analyze competition.

Will give you a "go" or "no go" answer about starting the business.

Small Business Plan Outline

Below is an outline for a business plan. Use this model as a guide when developing the business plan for your business.

Elements of a Business Plan Outline:

1. Cover sheet

2. Executive Summary

3. Table of contents

A. The Business

(1) Description of business

(2) Marketing

(3) Competition

(4) Operating procedures

(5) Personnel

(6) Financial data

B. Financial Data

(1) Loan applications

(2) Capital equipment and supply list

(3) Balance sheet

(4) Break-even analysis

(5) Pro-Forma income projections (profit & loss statements)

* Three-year summary

* Detail by month first year

* Detail by quarters, second and third years

* Assumptions upon which projections were based

(6) Pro-forma cash flow

* Follow guidelines for (5).

C. Supporting Documents

Personal financial statement (all banks have these forms)

Copy of proposed lease or purchase agreement for building space

Copy of licenses and other legal documents

Copy of resumes of all principals

Copies of letters of intent from suppliers, etc.

Writing The Business Plan - What It Includes

What goes in a business plan? This is an excellent question to ask. And, one that many new and potential small business owners should ask, but oftentimes don't ask. The body of the business plan can be divided into four distinct sections:

1) the description of the business,

2) the marketing plan,

3) the financial management plan and

4) the management plan.

Addenda to the business plan should include the executive summary, supporting documents and financial projections.

Description of the business

In this section, provide a detailed description of your business. An excellent question to ask yourself is: "What business am I in?" In answering this question include your products, market and services as well as a thorough description of what makes your business unique. Remember, however, that as you develop your business plan, you may have to modify or revise your initial questions.

The business description section is divided into three primary sections. Section 1 actually describes your business, Section 2 the product or service you will be offering and Section 3 the location of your business, and why this location is desirable.

1. Business Description

When describing your business, generally you should explain:

Legalities - business form: proprietorship, partnership, corporation, franchise. What licenses or permits you will need.

Business type: merchandising, manufacturing or service.

What your product or service is.

Is it a new independent business, a takeover, an expansion, a franchise?

Why your business will be profitable. What are the growth opportunities?

When your business will be open (days, hours).

What you have learned about your kind of business or franchise from outside sources (trade suppliers, bankers, other franchise owners, franchisor, publications).

A cover sheet goes before the description. It includes the name, address and telephone number of the business and the names of all principals. In the description of your business, describe the unique aspects and how or why they will appeal to consumers. Emphasize any special features that you feel will appeal to customers and explain how and why these features are appealing.

The description of your business should clearly identify goals and objectives and it should clarify why you are, or why you want to be, in business.

2. Product/Service

Try to describe the benefits of your goods and services from your customers' perspective. Successful business owners know or at least have an idea of what their customers want or expect from them. This type of anticipation can be helpful in building customer satisfaction and loyalty. And, it certainly is a good strategy for beating the competition or retaining your competitiveness. Describe:

What you are selling.

How your product or service will benefit the customer.

Which products/services (in your case the franchise) are in demand; if there will be a steady flow of cash.

What is different about the product or service your franchise is offering.

3. The Location

The location of your business can play a decisive role in its success or failure. Your location should be built around your customers, it should be accessible and it should provide a sense of security. Consider these questions when addressing this section of your business plan:

What are your location needs?

What kind of space will you need?

Why is the area desirable? the building desirable?

Is it easily accessible? Is public transportation available? Is street lighting adequate?

Are market shifts or demographic shifts occurring?

It may be a good idea to make a checklist of questions you identify when developing your business plan. Categorize your questions and, as you answer each question, remove it from your list.

 

 

Finding the Money Required to Starting a New Small Business. Now that You have calculated your initial capital requirements, where
will you receive the money? The primary source is your personal savings. Subsequently relatives, friends, or other people may be
found who are willing to"enterprise" their savings in your company. Before getting too large a share of cash from outside sources,
remember you should have personal control of enough to assure yourself possession.

Once you can show that you have carefully exercised your financial Prerequisites and can demonstrate experience and integrity, a
lending institution might be willing to finance part of your operating needs. This may be done on a short term basis of from 60
days to as much as one year. Any institution that has money to give is mainly concerned with safety. The security might be a
business advantage, but if you're just starting the ideal security is usually your home or any other private asset.

The next thing the lender will want to see is some sort of Business plan. If you complete a business plan - which includes a cash
flow forecast - that the lender will observe you have completed some realistic and serious thinking about your business and be
more likely to consider your request.

Become acquainted with your banker. In picking a banker consider Progressiveness, attitude toward your company, credit services
offered, and also the size and direction policies of the bank. Is the bank progressive? The physical appearance of the bank may
give you some indication. When the workers are reasonably young, considering your problems and active in civic affairs the lender
is very likely to be innovative. The character of the bank's advertising may also be a clue to its progressiveness.

To succeed the banker should be interested in Assisting You to Become a better manager, and build a continuing relationship which
will mean rewarding business for you as well as the lender over the years.

Will the bank offer you the kind of credit you need? For example, If seasonal accumulations of inventory turned into a problem
will the lender make a loan against public or field warehouse receipts? If your capital is tied up in accounts receivable during
your hefty selling season, will the lender take these receivables as security for a loan? Will the bank contemplate a term loan?

Finally, know the size and direction policies of the lender. Will Your maximum conditions fall nicely inside the bank's"legal
limit"? If you plan to do some export business, does it have a foreign exchange department? In the event that you or your traders
sell on installment terms does the lender have facilities for managing installment paper? How profoundly is the lender concerned
with the rise and prosperity of the local community?

When you handle your banker, sell your self. Whether or not you Want a bank loan, also make it a practice to visit your banker at
least once a year. Openly discuss your plans and problems. It's the bank's company not to betray a confidence. If you require
financial aid carefully organize, in written form, complete information that'll present a comprehensive comprehension of your
entire proposal. Many business-people or potential small business operators destroy their chances of obtaining financial help by
failing to present their proposition correctly.

Trade creditor or gear manufacturer, Companies from which you Buy equipment or product may also furnish capital to you in the kind
of extended credit. Producers of store fixtures, cash registersindustrial machinery frequently have financing plans under which
you might buy on an installment basis and cover from future income. You need not pay for the goods at once. If goods are for
resale, no safety other than repossession rights of these unsold merchandise is involved. However, too extended a use of credit
can prove expensive. Usually cash discounts are offered when a bill is paid within 10, 30, or 60 days. By way of example, a term
of sale offered as"2-10; net 30 days" signifies a cash discount of 2 percent will be awarded if the bill is paid within 10 days.
If not paid in 10 days, the whole amount is due in 30 days. If you don't take advantage of the money discount, you are paying 2
percent to use money for 20 days, or 36 percent per year. That can be high interest. Avoid it.

Among the main causes of failures among businesses is Inadequate financing. Should you go into company, remember it is your
obligation to provide, or obtain from other people, adequate money to supply a firm foundation for your enterprise.

Sharing Ownership With Other People. Now that you have decided what Business to begin and how much funds will be required, you may
find it necessary to join with one or more partners to launch the enterprise.

If you lack certain management or technical skills which are of Major value to your preferred company a partner with these skills
may prove a most satisfactory way to pay the deficiency. If you are extremely skilled in your particular area but lack direction
training and abilities, you might look for a partner using a background in direction. If you might need more startup money, then
sharing the possession of this business is 1 way to get it. Great care should be taken in deciding upon a partner. Personality and
temperament, in addition to ability to render technical or financial assistance, influence the success of a pa333ship.

A partnership may be a mixed blessing. A partner who puts in time Or money has got a right to expect a share in running the
business.

In a venture the accountability for the debts of the firm is Infinite, just as it is in a single proprietorship. This means the
owners are Personally accountable for the company's debts, even in excess of the sum they Have spent in the business. In a
business the liability of the owner is Limited To the amount that they pay for their shares of stock. A partnership, like a single
proprietorship, lacks continuity. Thus, the business terminates upon the Death of the owner or a spouse, or upon the withdrawal of
a spouse.

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