How to Design a Business Plan when you are starting out in new business venture
Posted by Jim Johnson in Business Loans SBA
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A well-formulated business plan serves three important functions. First, it serves as a plan of attack—how to get started in business. Second, it serves as a guideline enabling you to steer the business into a profitable position and then keep it there. Third in the event that you seek to borrow money to get started, the business plan will help you answer the five basic questions that a lender will have:
- What sort of person are you?
- What are you going to do with the money?
- When and how are you going to pay it back?
- Does the amount requested make allowances for unexpected developments?
- What is the outlook for you, your line of business, and for business in general?
Create a business plan that generally follows this out line :
A. Define carefully the business you are going to start.
B. Consider the market.
1. What is the sales potential?
2. How are you going to attract the customers
3. How are you going to sell to the customer?
C. Plan for buying.
1. From whom?
2. How? (Under what terms?)
D. Inventory control.
1. What is on hand?
2. What is on order?
3. What has been sold?
E. Getting the work done (internal organization).
1. Who is responsible for what?
2. Are there clearly defined job descriptions so that all employees know what tasks they are required to do?
F. Determine your money needs.
1. What are the start-up costs?
2. What are the operating expenses?
a. Break down the expenses.
b. Match expected sales revenues and expenses. Will sales bring in enough money to pay the bills on time?
G. Sources of additional capital (money other than your investment — for example, funds available to you from relatives or other commercial ventures).
1. Commercial banks.
2. Trade creditors and equipment manufacturers.
3. Small loan companies, factors (companies that lend against accounts receivable), commercial credit companies, sales finance companies, and insurance companies.
H. Control and feedback —is the business progressing according to plan?
1. Prepare and analyze monthly financial statements.
2. Institute control systems that cover the following areas:
a. Inventory
b. Sales.
c. Disbursements.
d. Breakeven—at what sales level will income cover expenses without showing a profit?
I. Will your business plan work?
- You are trying to predict what will happen in the future, so at this point you should review the plan to reassure yourself that you are being as realistic and accurate as possible.
- If someone else prepares the plan for you, make sure you go over it in detail with him or her and be sure you understand the information it contains.
J. Put the plan into action.
K. Keep the plan up to date. This is accomplished through your systems of control and feedback.
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Author: Jim JohnsonPlease Rate This Article
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