You have finally done it! You have made the decision to start your own business. Now what? The myriad of red tape and legal paperwork is a mountain that you are standing at the bottom of and looking up in wonder thinking ” What was I thinking ? I need the comfort of the corporate world!” Doing things legally and correctly the first time is one of the most important and time-saving activities that you may ever do for yourself and your business. “But what does my small business need?” you ask. A business plan. Now that you’ve decided that you’d like to open a small business, you should put your thoughts down on paper. This way, your business idea is expressed in a plan – a living document that outlines every critical aspect of its operation. This step might sound intimidating, but it’s important.
A business plan should be a work in progress. That’s because your business will evolve over time, and be influenced by outside factors such as the economy and local conditions. Even successful business owners should maintain a current business plan to ensure they remain knowledgeable on the elements that can affect continued success. The executive summary is the most important section of your plan. It provides a concise overview of the entire plan, along with a history of your company. This section tells your reader where your company is and where you want to take it. Included in the Executive summary should be:
- The Mission Statement — The mission statement briefly explains the thrust of your business. It could be two words, two sentences, a paragraph, or even a single image. It should be as direct and focused as possible, and it should leave the reader with a clear picture of what your business is all about.
- Date the business began
- Names of the founders and the functions they perform
- Number of employees
- Location of the business and any branches or subsidiaries
- Description of plant or facilities
- Products manufactured/services rendered
- Banking relationships and information regarding current investors
- Summary of company growth including financial or market highlights (for example, your company doubled its worth in a 12-month period; you became the first company in your industry to provide a certain service)
- Summary of management’s future plans. With the exception of the Mission Statement, all of the information in the Executive Summary should be highlighted in a brief, even bulleted, fashion. Remember, these facts are laid out in-depth within the plan itself.
You must also include a company description in the Business plan. The company description section should include information about the nature of your business as well as list the primary factors that you believe will make your business a success. When defining the nature of your business (or why you’re in business), be sure to list the marketplace needs that you are trying to satisfy. This should include the ways in which you plan to satisfy these needs using your products or services. Finally, list the specific individuals and/or organizations that you have identified as having these needs.
The money situation is next… in the financial plan for your company you will propose the request of the amount of funding you will need to start or expand your business. If necessary, you can include different funding scenarios, such as a best and worst case scenarios, but remember that later, in the financial section, you must be able to back up these requests and scenarios with corresponding financial statements.
You will want to include the following in your funding request: your current funding requirement, your future funding requirements over the next five years, how you will use the funds you receive, and any long-range financial strategies that you are planning that would have any type of impact on your funding request. When you are outlining your current and future funding requirements, be sure to include the amount you want now and the amount you want in the future, the time period that each request will cover, the type of funding you would like to have (i.e., equity, debt), and the terms that you would like to have applied.
Last of all, make sure that you include any strategic information related to your business that may have an impact on your financial situation in the future, such as: going public with your company, having a leveraged buyout, being acquired by another company, the method with which you will service your debt, or whether or not you plan to sell your business in the future. Each of these are extremely important to a future creditor, since they will directly impact your ability to repay your loan.
This business plan will help you to take a realistic look at your business plans and set up some goals… check back for the latest info of how to file all the proper paperwork with the state to make your business legit.