After generating a business idea, the next — and possibly most important — step in the process of starting a new business is crafting a thorough business plan. A plan will effectively serve as the blueprint for your business. It will explain your reason for existence, and the place you will occupy in your industry. It will also demonstrate a solid understanding of the market in which you’ll compete. Ultimately, it will offer detailed financial projections and a funding request.
There is no one perfect template for a business plan, but there are several categories that you’ll likely include in yours. Here are three of the most important, and what they need to stand out.
1. A Comprehensive Executive Summary
The executive summary effectively gives a brief, but detailed, an overarching summary of your business. What exactly will you be selling? Why are you qualified to do so, and how will it be successful? Information like your mission statement, a basic company description, and a generalized summary of plans should all be included in this section.
If you imagine the entire business plan as a book, you should see your executive summary as a hook. It should interest people — particularly lenders — in your business, and be compelling enough to keep their attention and gain their support.
2. Detailed Financial Summary and Projections
Nailing the details is crucial to convincing lenders you’re serious about your business and are capable of repaying any loans. A great idea has to be backed up by numbers that show it’s workable.
You want to paint an accurate picture of your current finances. If you’re asking for funding for a new business, this may include listing your current assets and debts. If your business is already up and running, financial data — including balance sheets, income statements, and tax returns — may be needed.
Finally, this section should include specific future projections of revenue growth and fiscal health.
3. A Funding Request
In many ways, this is where everything else in your plan should lead. Once a prospective lender arrives at the funding request, they should understand what your business looks like, and why you need financing. The request should be a reasonable amount, commensurate with the business description you’ve already laid out. You’ll also want to be specific about why you need the money, and what aspects of your business it will go towards.
Ultimately, an effective business plan will be an asset to both you and your lenders. Take the time to craft it carefully and set yourself up for long-term success.
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