Investors want detailed information to confirm the viability of their business idea. Expect to provide a profit and loss statement for the business plan that includes a complete snapshot of your business. The income statement shows income, expenses and profits. Profit and loss accounts are prepared monthly for startups and quarterly for established companies. A business plan can help you identify clear and conscious next steps for your business, even if you never intend to introduce investors, and it can help you identify gaps in your plan before they become problems. The template consists of eight main sections with subsections for each topic. For ease of navigation, a table of contents is provided with the template. Customizing each section will give you guidance on how to spell the required details correctly. Calculating the benefit to the user is only the first step. An entrepreneur must also prove that customers are intrigued by the user`s claims of advantage and that they like the product or service.
The business plan should reflect clear positive responses from potential customers to the question “After hearing our presentation, will you buy?” Without them, as a rule, no investment is made. There are two main types of business plans: simple and traditional. Traditional business plans are long, detailed plans that explain both short- and long-term goals. In comparison, a simple business plan focuses on a few key indicators in concise detail to quickly share data with investors. Focus on the key elements of your business plan and avoid getting too bogged down in the technical aspects of your business or using too much industry jargon. You may include supporting information or other important details in the appendix at any time. Business plans help companies identify their goals and stay on track. You can help businesses start, manage, and grow after they go live. They also serve as a way to get people to work with and invest in the company. “If you don`t have financial forecasts that are part of the business plan, it`s very difficult to show the bank how you`re going to repay the loan,” Allen says.
Before considering investor concerns when evaluating business plans, it`s worth estimating who your potential investors might be. Most of us know that investors for new and growing private companies can be professional venture capitalists and high net worth individuals. For companies, they are the company itself. When a company offers shares to the public, individuals become investors by all means with various institutions. Once you know your values, you can write a mission statement. Your statement should convincingly explain why your business exists and should not be longer than a single sentence. The summary is the most important section of your business plan, as it should involve your readers in your plan and entice them to keep reading. If your summary doesn`t grab the reader`s attention, they won`t read further and their interest in your business won`t be piqued.
A good business plan should outline all the anticipated costs and potential pitfalls of any decision made by a company. Business plans, even between competitors in the same industry, are rarely identical. But they all tend to have the same basics, including a summary of the company and a detailed description of the company, its services, and products. It also indicates how the company intends to achieve its objectives. The plan should at least include an overview of the industry to which the company will belong and how it will differentiate itself from its potential competitors. This is where you list the legal structure of your business, such as a sole proprietorship, partnership, or corporation, as well as the employees, managers, or other key owners of the business. It should also include each owner`s percentage of ownership and the extent of each owner`s stake in the business. Finally, a break-even analysis should be included in your financial plan.
The break-even point is where your company`s sales totals cover all of its expenses. Investors want to know your revenue needs in order to assess whether your business is able to meet the financial milestones you set out in your business plan. You need to convincingly predict the adoption rate of the product or service and the rate at which it is likely to sell. From this market research data, you can start building a credible sales plan and forecasting your asset and workforce needs. A business plan is not designed as a static document. As the business grows and evolves, so should the business plan. An annual review of the plan allows an entrepreneur to update it taking into account the markets. It is also an opportunity to look back and see what has been accomplished and what has not. Think of it as a living document that grows and evolves with your business. This is the first page of your business plan. It should include a mission statement that explains the purpose of your business, as well as a brief description of the products or services offered, basic information such as ownership structure, and a summary of your plans. Your products or services will play an important role in most areas of your business plan, but it`s important to provide a section that outlines the important details about them for interested readers.
These breakdowns are often presented as grids, with bullet points in each section breaking down the most relevant information – so you can probably skip entire paragraphs here. Strengths and weaknesses – two internal factors of the company – are listed first, opportunities and risks follow in the next line. With this visual presentation, your reader can quickly see the factors that can impact your business and determine your competitive advantage in the market. While we`d like it not to be, writing effective business plans is as much an art as it is a science. The idea of a master document whose leaders can only fill in the gaps – just as lawyers use model wills or real estate contracts – is appealing, but unrealistic.