Writing a Business Plan
Quite possibly the most important step in starting your new business is going to be writing your business plan. This is a document that tells you and potential investors exactly how you plan to run your business. A well written business plan be the difference between a successful company and one that never gets off the ground. In order to get financing for your company you are going to need to show the bank or your potential investors your business plan. By and large the decision on whether they give you any money is going to depend on how impressed they were with your business plan. Before you even think about starting a business it is important that you know how to write a business plan.
A business plan should clearly explain what it is you are planning on selling and how you plan to do that. A thorough market analysis should also be a part of the plan, you should be able to tell potential investors how big the market is and who those people are. You should also be able to tell them how you intend to reach that market. The competition will also need to be factored in, you need to be able to describe who you are competing with and how you plan to compete. Most industries are very competitive you need to clearly show what makes your product unique and explain why customers would buy from you rather than your competitors. It is important that your business plan be realistic, you don't want to paint too rosy a picture otherwise investors will worry that you haven't thought things through. There are going to be challenges in running your business and investors will want to know what they are, more importantly they will want to know that you know what they are.
There are a number of ways that a business can be structured, whether it's a sole proprietorship, a partnership or a corporation. The right choice will depend on your business, mainly on it's size, but also on other factors.
Your business plan should explain which structure you have chosen and why.
It is also important to discuss who will actually be running the business and talk about their experience and expertise. The strengths and weaknesses of your management team will need to be addressed, and again it is important to be realistic. There will be weaknesses and it is important that you and your investors be aware of them.
The biggest part of your business plan and the most confusing for most people is the financial side. Determining how much money you need to start your business is fairly straightforward, the problem comes when projecting earnings. A business plan needs to provide a projection of how much you expect the business to earn and over what kind of time frame. The focus should be mainly on the first year of operation but you will need to address longer time frames as well. This is why you did all of that market research in the first part of your business plan, it gives you something to base these estimates on. Most people are too optimistic when they discuss the financing of their business so you need to be careful to make a realistic assessment.