BUSINESS PLAN : Do I Need a Business Plan?

Not everyone who starts a new business begins with a business plan. It all depeneds on what size and kind of business. If you are a freelance designer or you are a one man show data entry business then you don't necessarily need a business plan. If you are seeking funding from a venture capitalist, you will certainly need a comprehensive business plan that is well thought out and demonstrates sound business reasoning.

If you are approaching a banker for a loan to start a new business, your loan officer may suggest a Small Business Administration (SBA) loan, which will require a business plan. If you have an existing business and are approaching a bank for capital to expand the business, they often will not require a business plan, but they may look more favorably on your application if you have one.

Reasons to write a business plan include:

Support a loan application
Raise equity funding
Define objectives and describe programs to achieve those objectives
Create a regular business review and course correction process
Define a new business
Define agreements between partners
Set a value on a business for sale or legal purposes
Evaluate a new product line, promotion, or expansion

If you are going to write a business plan for your colleagues and partners, for example, to expand an existing business, then the focus of that plan may be more operational than financial. Yes, you need to show your partners how this expansion will mean more revenues, but they are going to want to know the details of how this new venture is going to be implemented.

If you are going to write a business plan for a bank, your bank manager will want to see that your business ideas are well thought out, but the most important factor will be your financials. Are your assumptions realistic? And will the cash flow of the business be enough so that you can make the monthly payments for the loan that you have requested? If your business is making $2,000 a month and your payments are $2,200 a month, the bank is likely to turn you away.

Most venture capitalists look at the obvious trends and market niches when considering an investment opportunity. Transcending the business elements, however, the most important factor in a decision to invest in a company is the quality of the people. In real estate, the three biggest criteria are "location, location and location." The venture capital axiom is "people, people and people." VCs want to see that your management team is going to have the proper experience to run the business? Do they have knowledge of the industry? Have they started successful ventures in the past?

What makes a successful business plan?

Presents a well thought out idea
Contains clear and concise writing
Has a clear and logical structure
Illustrates management's ability to make the new business a success
Shows profitability

Your business plan is like your calling card, it will get you in the door where you'll have to convince investors and loan officers that you can put your plan into action. You want your calling card to look impressive, so make sure your business plan is printed out on good quality paper, you have checked the spelling and grammar and that your numbers add up. Anyone who sees errors while reading your plan will wonder whether you are going to make similar errors in running your business.

A great business plan is the best way to show bankers, venture capitalists, and angel investors that you are worthy of financial support. Make sure that your plan is clear, focused and realistic. Then show them that you have the tools, talent and team to make it happen.

Free Sample Business Plan Remember that your plan should be only as big as what you need to run your business. While everybody should plan a outline to help run a business, not everyone needs a complete formal business plan unless you are submitting to a potential investoror bank. You can use a less formal plan to outline what your goals to run your business if you don't need investors to stay in track of your progress. Many business owners get lost after a while, and that my friends is one of the ways how businesses fail...	Design Your Plan to Fit Your Business Business planning is about results. For every business plan, you need to make the contents of your plan match your purpose. Don't accept a standard outline just because it's there. In the United States business market there is a standardization about business plans...
Five Business Plan Mistakes If you are preparing to raise capital from either an investor or a bank, you’re probably writing a business plan. Here are five of the most common mistakes that I have seen as a result of my experience as a commercial banker and corporate-finance consultant...	Do I Need a Business Plan Not everyone who starts and runs a business begins with a business plan. It all depeneds on what size and kind of business. If you are a freelance designer or you are a one man show data entry business...
How to Write a Business Plan Writing a business plan can be overwhelming. Your not going to be able to sit down at your computer and crank out a plan. Just like everything else that is worth doing, you need to take the time and aquire some information....	7 Aspects of Business Wondering how to start a new business? Then keep these seven aspects of business in mind when starting your own business...