Starting a business is an exhilarating endeavor. The prospect of offering a new product or service to the world, designing one’s own future, and creating a legacy are why many people step into the world of business. Yet, there are many mundane facets that must be addressed. One of these is obtaining the requisite funding to begin the business or to facilitate growth.
The first step in convincing an individual or company to invest in your business is a solid business plan. Some of the categories that need to be included within a business plan are a company description, market analysis, organization and management, linear service, marketing and sales. For those interested in financing their business with outside capital, a funding request and financial projections must also be included. Once all of the information is gathered it is time to approach a creditor. One of the most popular methods of funding a business is a business loan.
- Business plan.
A business planis a map for the upcoming three to five years for a company. It is comprised of several components and is meant to be a living document, one that is able to grow and change as the needs and abilities of the business change. The first step of creating a business plan is designing a thoughtful executive summarythat encapsulates the entirety of the business plan and references the company goals and profile. The company description should provide the salient details of what the business does, why it is different from similar competitors and the primary markets it will target.
A market analysis should be completed prior to beginning a new venture. This will create a clear picture of the industry, outlook of the industry, information about the target marketand potential market shareavailable. An organization and management section will help define organizational structure, details about ownership, management profiles and qualifications of a board of directors. It is then time to describe in detail the product line or service the business intends to offer and the marketing and sales methods, which will be.
- Funding request.
If part of the purpose of putting together a comprehensive business plan extends to submitting a funding request from potential investors, this will become a section of the business plan. Within it one should include the amount of funding the company requires and the projected amounts for the upcoming five years. Details of how the funding is to be implemented should be explained in detail, as well as the preferred type of funding and associated terms. Finally, any important financial plans for the future should be outlined. These include buyout plans, selling the business, debt repayment or ensuring the company is acquired. All of these are important considerations for any individual or company considering funding the future of the business.
- Financial projections.
Including a financial projections section in the business plan allows stakeholders to get a big picture of where the company intends to go over the coming years. While it may be tempting to put goals and hopes in this section, it requires hard data. This section should only be completed after a market analysis has been completed and realistic and clear objectives outlined. This allows a business to allocate resources effectively.
Historical financial data is an important component of creating solid financial projections. Creditors will want the information for the past three to five years of an established business. Businesses that are new will obviously not have this information, but any financial history available should be included. Items such as balance sheets, cash flow statements and income statements should all be included. Any business assets such as buildings, vehicles or machinery that could be used as collateral should also be included.
I hope its been useful? ….