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Old 2nd October 2007, 06:02 AM   #1
BumerM
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Default A Great Business Plan

Keep in your mind that the basic purpose of your plan is to demonstrate how much money you need, why you need it, and when your investor can expect to get it back. Your business plan must be simple, but complete, and realistic. With a great business plan you'll be able to convince your investor to have confidence in you and your company and to lend you the money.
If you want to raise substantial capital for your privately held business, you need a competently prepared business plan. You must convince the investor that your business is able to repay the debt, through principal pay-downs and/or the issuance of publicly traded stock to the lender.
Here's what Robert Krummer Jr., chairman of First Business Bank in Los Angeles, said about this situation:
"The business plan is a necessity. If the person who wants to start a small business can't put a business plan together, he or she is in trouble."

Essentials of a Business Plan

This article will give you the definition of a business plan - the elements that must be included. It won’t give you all detail about a business plan. However, you can get much more information on the subject. Recently I did a Google search on business plans and came up with 318,000,000 results!
There are a lot of helpful topics out there. Your main goal will be to retrieve essential information and incorporate it into your business plan. You can always embellish this with other information as you see fit.
My definition might be a bit different than most you will see. Here it is: A business plan provides the reader with the present status of your company, where you want it to go, and how you intend to get it there.
Within this plan, you must show the current financial condition of your company and how your present financial situation will change in the next five years.

The main purpose of a plan is to demonstrate to an investor that you have a complete, clear and conservative economic vision of your business. It should give the investor comfort that you will safely be able to repay your loan at some future time. Therefore, it must include how much you want to borrow, why you want to borrow it, and how you will use the proceeds.

Basic Elements of a Business Plan

Now let's have a look at the components of your plan.

1. The main Description of Your Business. Although you should write a complete description of exactly what your business is about, don't make it too technical. Make sure that the reader, after having read it, will have a firm grasp of your business and how it serves its customers/clients.

2. Competition. Clearly describe who your rivals are and which of them dominate the field. For example, let's say that you have 10 major competitors. One or two of them control 60 percent of the revenue in your field. Explain how and why the dominant competitors were able to reach so high level of sales. Then, show how you intend to make inroads on your competition. Be sure that you are conservative and realistic.

3. Marketing. Here you should provide a detailed description of the marketing techniques that will bring your company to your desired annual sales levels. It should demonstrate to your prospective investor that you are not only confident and serious about increasing your sales base, but that you also have the requisite techniques to do so.

4. Personnel. Here you should describe your management team. Include resumes of all of the top managers. You should also list other employment categories (production/sales/administrative) and quantity of individuals you have in each category. Of course, show your total employment numbers.

5. Financial Data. Here you must show your current financial position (balance sheet) as well as your present income statement. You must then prepare pro-forma financial statements. These statements (both pro-forma balance sheet and pro-forma income statement) are the accounting equivalent of budgets. They will show where you are going financially. Additionally, you should provide pro-forma cash-flow statements. These statements are critical to the lender in that they show the stream of cash going into and out of your business and the projected balances thereof at certain points in time. In all of your projections, you must be able to support why you think that you can achieve certain levels of sales and why you think that you can control the outlays of expenses to keep them within the parameters of the pro-forma statements.


Keep in mind that your lender wants to be assured of repayment of the loan. You have to convince him that you will use the funds in a prudent way and that the money lent to you will permit you to generate future cash flow with which you will pay back the loan.
As it was said earlier about repaying the lender with publicly held stock. This is certainly a great option and can give the lender a greater return on his money than if you were to repay your debt in cash.

Remember About The Basics.

Keep in mind that as part of the process of impressing a prospective lender, you must demonstrate that you have a sound management team. Part of that team is your board of directors. Your corporate officers and your board of directors should inspire lender confidence. It is very important for you to show that you have an independent board of directors.
When you are writing up your business plan, don't be intimidated by the task. For the financial part, you can go to your CPA. For the portion on competition and marketing, you can go to a competent and respected marketing person who is thoroughly conversant with all of the ins and outs of your business. Remember, as it is said above, that there is a lot of data on business plans on the Internet. There is so much, in fact, that you have to be quite selective so as not to get lost in the details.
Also remember that the basic purpose of your business plan is to demonstrate how much money you need, why you need it, and when your lender can expect to get it back. Make the business plan simple, but complete, and realistic. With a good plan you'll be able to convince your investor to have confidence in you and your company and to lend you the money.

Best regards!

No part of this publication may be reprinted without link to the goldinet.com


Last edited by BumerM; 3rd October 2007 at 07:42 AM.
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Old 2nd October 2007, 11:32 AM   #2
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Nice post! thak you, Ive been looking for quite some time now for a short and sweet overview on how to make an effective business plan.

The way I see it, the business plan is not only something that you use to impress potential investors or lenders but something to keep a business in check and in perfect working order. Do you know of any other sites that could teach us more? Is there a Business Plan for (Extreme) Dummies somehwere? : )

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Old 2nd October 2007, 05:21 PM   #3
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Default Great post!

Now the users need to come up with some good ideas of actual businesses! It'll be nice to kick these ideas around on the forum - might be inspirational...

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Old 3rd October 2007, 07:39 AM   #4
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Quote:
Originally Posted by Wilks_eye View Post

The way I see it, the business plan is not only something that you use to impress potential investors or lenders but something to keep a business in check and in perfect working order.
Hi Wilks_eye!

I completely agree with you. And if you read this topic again from your point of view you’ll see, that it works for you as well, but not just for lender or investor. To run your business successfully you should know about your business field as much as it possible. And it must be written on a piece of paper.

Just write everything you know, using the simple plan described above, find out about anything you don’t know, and visit some respectable CPA and financial advisor to correct your plan. This is not as complicated as it looks.
For additional info, you should surf the net.

Good Luck!


Last edited by BumerM; 3rd October 2007 at 07:44 AM.
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Old 29th September 2009, 12:16 AM   #5
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Smile Great Business Plan

Many Thanks actually a nice informative blog post. You have given great idea about business plan. Considering the basic components of a business plan, you should make the business plan simple, but complete, and realistic. I agree with you that a good business plan helps you to convince your investor to have confidence in you and your company and to lend you the money. Now-a-days, you can also opt for business plan software... They are reasonable than hiring a business plan consultant.

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Old 20th October 2009, 09:14 AM   #6
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One or two of them control 60 percent of the revenue in your field. Explain how and why the dominant competitors were able to reach so high level of sales.

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Old 22nd October 2009, 08:37 AM   #7
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Business success is as unpredictable as the waves in the sea. However, if you have a plan, you will be able to prepare yourself for the ups and downs of running a business. Business plans can help save you the trouble of pursuing a futile venture because they are designed to help you analyze your business idea.

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Old 26th October 2009, 09:47 PM   #8
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Wow that's great information gave you here.
Thanks for this thread.

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Old 28th October 2009, 09:00 AM   #9
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I agree the planning in business is vital for success. However, still requires a lot of things such as proper strategy and implementation of the plan and then attitude towards the business.

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Old 11th May 2010, 02:45 PM   #10
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In addition to the great ideas on this thread I have always seen a business plan get more attention when in the first or second paragraph of the executive summary the author explains what the customer problem is and how their product or service is going to solve it.

Of course you would use this suggestion if you are looking for financing. If you are using your business plan as a working document to help you in your business on an ongoing basis and not for financing then you already know what the customer problem is and how your product or service is going to solve it.

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