The Five-Step Process for Creating a Business Plan
The Five-Step Process for Creating a Business Plan
Asking, "What are the key components of a successful business plan?" As an alternative, "How do I make my plan attractive to lenders and investors?" .
First and foremost, those in the lending and investment industries (who will be referred to as "readers" from now on) are always on the lookout for "good deals" To a reader, a "good deal" is an offer that provides a fair return on investment relative to the risk taken. The long and short of it is that you need to craft an engaging business plan and distribute it to people who are interested in projects like yours, with varying degrees of risk and potential reward. Writing an engaging business plan is the first component of the equation, and that is what this article will discuss.
The plans should be presented in a clear, accurate, and comprehensive manner so that readers may make an initial assessment regarding the project. The procedures for drafting that strategy are as follows:
The three pillars of any successful business plan are, to borrow a real estate adage, research, research, and more research. Your plan's success or failure will depend on the accuracy and thoroughness of your data, even while other factors are crucial (even critical). How much information is enough for you to make an informed decision before you invest your time and money into a project? First thing to do:
First, master your project. Thoroughly familiarize yourself with:Your target market consists of the people you intend to sell to.The rivalry.The real expenses associated with running your firm (get estimates).Results from comparable initiatives in practice.This field that you work in.Where the project is being carried out and how it will be affected, if at all.Individuals who will play an essential role in the project?
Here are some sample questions that we use while reviewing company plans using FundablePlans; feel free to use them as a starting point. At http://www.fundableplans.com/how-to-do-a-business-plan.html, you can get it by email.
If everything went according to plan, you should now have a mountain of research materials (notes, websites, reports, quotes, etc.) to work with. But how significant is it? Second step:
2. Evaluate. I hope you were enthusiastic and thought "this is a sure winner" when you initially had the idea for your project. The moment has come to find out whether your sentiments were justified. Evaluate your project thoroughly by conducting a "SWOT" (strengths, weaknesses, opportunities, threats) study. Think about how you can make the most of the S and O while limiting the impact of the W and T.
You should be pleased that steps one and two may have altered your "sure winner" sentiments to some extent. If that isn't the case, then you've either found the next "sliced bread" or you need to start all over from the beginning. Going forward to step three, assuming your research and analysis demonstrate a worthwhile investment of your time and money (and your readers'),
Thirdly, the outlook. The phrase "rubber meets the road" describes this point. "This is what will happen to the money" is what you're going to inform your readers based on your research and analysis. Accounting projections known as "pro forma" statements will help you with this. Typically, the first year is done monthly, the second and third are done quarterly, and (if included) the last two years are done annually. You can choose to submit three or five years' worth of statements. At the very least, make sure to:Financial statements for operations.Financial projections.Financial statements.Several ratios (debt service coverage, loan-to-value, etc.) are optionally included.
A "Source and Use of Funds" section detailing where the initial funding came from and how it would be put to use is typically included with the aforementioned sections.
Either you've already decided on a winner (not "a sure winner" but knowing what the hurdles are and are ready to overcome them) or you're starting again with a new idea. Moving on to step four, if you "have a winner":
4. Compose the strategy. Good spelling and grammar skills are obviously required. Make sure to be precise, brief, and thorough. Use the convincing evidence you found in your research to support your plan. In your SWOT analysis, don't leave out the W and T; instead, explain in depth how you'll handle them. Stay away from self-serving statements and clichés; readers want evidence to decide for themselves whether the notion is good or not. While providing complete information, try to keep your responses brief. Aside from the Executive Summary, your responses should be "short, sweet, and to the point"—i.e., relatively dry and factual.
Conversely, you want to "sell the sizzle" in the Executive Summary. Here you assert that your project is innovative and deserving of thorough evaluation. Get your audience interested in reading your proposal by sharing your enthusiasm for the project.
A business plan can be created in a variety of methods, perhaps matching the number of authors who have done so. Please see http://www.fundableplans.com/sample_business_plan.pdf for an example of a business plan outline. (Our logo is on it, and you need Adobe Reader to see it.) That's not what we had in mind. If your company is not just starting out, you should include all relevant paperwork and financial records in your strategy.
The majority of the work is now done; the last remaining step is 5: 5. Evaluate and edit. The authors should be the first to assess the plan, followed by trusted advisors; this will increase the likelihood that you will discover issues before readers do.
In order to have a business plan that is read and, ideally, funded, follow the processes that were previously mentioned. Use the email address down below to get in touch with me if you need any help with company strategies.
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