Business Plan

Business plans are normally required by bankers, investors and partners when you approach them for finance or their services. It is very unlikely that any of them will lend you money based solely on a business plan but it may help in giving them confidence that you are well researched and profession when it comes to your business and that you are not going to waste their money. This will also give them assurance that you will repay the debt in a reasonable time. The most important reason why you’re making a business plan, it to make sure that your venture makes business sense. In short, it’s for your own benefit.

Before we begin, let’s get one thing straight. Business plans are not too complicated or only made by professionals. You have already started the process, most likely in your head but now it’s time to put it on paper. Use the following headings so that it is logical and well thought out. It will follow in the correct order:

Executive summary

You need to describe what your business will do, how it do it and why it will be success. This summary will give both you and the reader an idea about how the company will operate and what the background is behind the launch.

Business and operations overview

This is a more detailed description of what your company will do and how it plans to be successful. You need to consider your daily operations in details. Describe your products and services in a fair amount of detail by focusing both on its advantages and disadvantages. You will also describe the logistics of getting your product to the market place.

Market plan

This is all of your market research, not matter how informal it may be. Why is your product most likely to succeed? Who are your target markets? How do you plan on advertising your products and services? Who are your competitors? Always keep these questions in mind.

Company Management

This is the management of the business. Who is going to do what? What are their skills and experience? Often, it is the owner but you need to make sure that you have all the skills to run the business. The chain of command and who you’ll outsource functions to is very important.

Assets and Infrastructure

Any assets and infrastructure must be listed here. Where you’ll be operating from, the facilities your premises has, what equipment you need and any other assets your company will use.

Financial analysis

This is the most important section of your business plan. You need to come up with your expected future income statements, balance sheets and cash flow statements.

  1. Income Statement

    The income statement or profit and loss report will be a summary of your income and expenses for each month for the first 2 to 3 years of the business, In the final business plan, you simply have one for each year but it is strongly recommended that you do your own calculations for each month. Simply subtract your total expenses from your total income to calculate a month’s profit or loss. Don’t forget to set up costs, repayment expenses and taxes which are often left off the expense list.

  2. Cash flow statement

    The cash flow statement is similar to the profit and loss but if you plan on having accounts for your customers, they will only pay a few months after you’ve invoiced them. You will need to calculate the actual amount of money you’ll put in the bank account from both the previous month’s sales and the current month sales paid on invoice date. You then subtract the actual cheques or transfers you will be making out of your account in that month. Basically, you predict what your bank account statements will look like at the end of each month. This is a very important report because you need to consider the possibility that customers will pay you late and also the possibility that you’ll take a few months before you turn a profit.

  3. Balance sheet

    The balance sheet will simply be a list of all your assets and liability of each period, either monthly, quarterly or yearly.