Success in my Business Plan
Writing a Successful Business Plan: 8 Answers From a Small Business Mentor
“In my nine years of mentoring, I have worked with over 1,000 small business clients — both in business and those thinking of starting a business.
I see each of them one-on-one and have felt their struggles, frustrations, and fears in writing a business plan. I have also seen the great improvements that can be made with a little coaching.
– Hal Shelton, author of The Secrets to Writing a Successful Business Plan
Hal Shelton, author of The Secrets to Writing a Successful Business Plan
For nearly a decade, Hal Shelton has dedicated his life to helping small businesses succeed.
As a SCORE small business mentor, he has worked with more than 1,000 small business owners and has learned firsthand the importance of an effective business plan.
I had the chance to sit down with Hal to discuss his new book, The Secrets to Writing a Successful Business Plan, and to learn more about what it takes to create the perfect business plan.
I also took the opportunity to ask Hal about his experience as a small business mentor, and how working with a mentor can help a business owner succeed.
Here is my full interview with Hal Shelton:
Would you tell me a little about your background as a small business mentor?
I fully subscribe to “giving back.” I had mentors throughout my career, so now I volunteer to provide this coaching to others.
I am committed to and passionate about helping small businesses. I have been a corporate executive and board member for publicly traded companies and nonprofits, certified SCORE small business mentor and chapter leader, a SCORE national board of director, and an early-stage company investor.
Years ago, I heard a friend’s enthusiasm for being a SCORE volunteer. With my interest piqued, I asked him to tell be more and why he cared so much year after year. Nine volunteer years later, I am just as enthusiastic.Founded in 1964, SCORE is a nonprofit devoted to helping people with mentoring, advice, training and education to start, operate and grow successful companies. SCORE with 11,000 volunteers in 320 chapters across the U.S. is about business people helping business people with business issues–all for free.
Last year, according to a survey conducted for SCORE by Pricewaterhouse Coopers, SCORE clients started 38,630 new businesses, created 67,319 new jobs; in addition 40,175 client companies experienced revenue growth.
What inspired you to write your book, The Secrets to Writing a Successful Business Plan?
The past few years have been challenging times — when more and more people are going into business for themselves. That means greater competition to develop a solid business venture that succeeds over time.
In my nine years of SCORE mentoring, I have worked with over 1,000 small business clients — both in business and those thinking of starting a business. I see each of them one-on-one and have felt their struggles, frustrations, and fears in writing a business plan. I have also seen the great improvements that can be made with a little coaching.
With my experiences and training, I know something about business plans so I was looking for a way to reach a greater number of small businesses quickly, and the book was the solution — putting the keys of success that have helped my SCORE clients on paper so everyone can benefit.
I think a lot of people have heard about business plans before, but how do you define a business plan? What is it, and why is having one so important?
A business plan is a process to test ideas to determine if they are feasible and financially attractive; it becomes a road map to successful business idea implementation. During the process, messages facts and analysis are developed, which can be used in discussions with others.
Appearing next week in the first blog is the full answer to this key question.
In the book you talk about The 12 Commandments of Writing a Business Plan. Without giving too much away, I’m interested to know how you came up with these
The commandments summarize the book’s key themes and my experience are the foundation of an effective business plan. To see all 12 Commandments, go to my web-site at www.secretsousinessplans.com and click on the book to “look inside” and read the entire introduction for free.
What are some of the biggest challenges you’ve seen entrepreneurs face when coming up with a business plan? And what are some of the most common mistakes?
I have identified 18 common mistakes/challenges faced by entrepreneurs in developing their business plan. Here are three.
- The business plan does not succinctly describe why the business idea will be successful—the value proposition and the competitive advantage statements are weak.
- The sales forecast is not believable—it is not supported by a well-thought-out marketing action plan.
- The business plan reflects poorly on the entrepreneur—it’s not laid out in a logical manner, there are spelling and grammar errors; charts do not covey the message, etc.
There are simple ways to overcome these mistakes and this is the type of help I want to provide through my book and the blog series.
As a small business mentor, I know you’ve worked with a ton of entrepreneurs. What are some of the benefits of working with a business mentor? How can someone go about finding a mentor to work with?
A business mentor with experience in you industry, or a particular business area experience marketing or finance can provide valuable information about how to conduct your business, so you can avoid the common pitfalls and achieve success—the “been there, done that” experience.
Also, business mentors who are not family and close friends might be less inhibited to sharing feedback you might not want to hear. For example, family members might feel they cannot be critical of a business idea or tactic, while an experienced mentor can demonstrate what others have done in similar situations.
Here are links to the three SBA (Small Business Administration) “resource partners” that offer free business mentoring:
- Small Business Development Centers
- Women’s Business Centers
Your book is full of awesome advice for writing a successful business plan, but if you could give one piece of advice to someone who is just getting started, what would you say?
Whether you are an experienced or just starting entrepreneur, surround yourself with trusted advisors and mentors, and talk through your business ideas with them.
Starting and growing a business is difficult, and more than half will fail by the fifth year. No one person can have all the knowledge, experience, or even perspective to handle every business situation.
Gain from other’s skills and experiences.
I enjoy surf fishing. With toes buried in the sand, listening to the rhythm of the waves and waiting for the fish to bite — which is most of the time — there is opportunity to think and solve many of the world’s problems and how I will cook the catch.
Stay tuned for more…
Over the next few months, Hal Shelton will be sharing his expertise here on the Constant Contact blog.
Topics will include why you need a business plan (and the best style for you), four sections every business plan must have (and why they’re important), when is the best time to revamp your business plan, and creating a business plan for a nonprofit.
Have additional questions for Hal? Post them in the comments below.
5 Secrets to Success in Business
December 22, 2017 9 min read Opinions expressed by Entrepreneur contributors are their own.
I often wonder what the secret to success is. Especially when it comes to business.
Because, at the end of the day, we're all in this struggle. A rat race, if you will. Constantly fighting an uphill battle. Often, we feel frustrated. Sometimes, defeated.
But, what if I told you that the secrets to success in business aren't as complicated as many make them out to be?
Okay, coming from me, those words might not have the same impact. But, what if I told you that this information comes directly from two of the best salespeople on the planet? As a student of self-improvement, I've followed many of the world's most sought-after purveyors of success. Anthony Robbins, for one. He's definitely my hero. But, so is Zig Ziglar.
If the name Zig Ziglar doesn't ring a bell, then you might have been hiding under a rock for the past few decades. He's touched the lives of over 250 million people around the planet. Sold millions of books. And most certainly created thousands of millionaires. Now, while Ziglar might no longer be among the living, his words most certainly live on.
Ziglar coined iconic quotes that are often referenced today in business. Things , “Your attitude, not your aptitude, will determine your altitude.” Along with, “What you get by achieving your goals is not as important as what you become by achieving your goals.” And, “You were born to win, but to be a winner, you must plan to win, prepare to win, and expect to win.” Plus so much more.
These are age-old adages. Sure to last generations upon generations to come. But, I wasn't just interested in his words. I was also keenly interested in his students. In fact, one in particular.
Kevin Harrington, which many know from Shark Tank fame, is by far one of Ziglar's most successful students.
While Ziglar mentored many, Harrington has taken that knowledge and created a proverbial empire with it.
So if there was one person in particular to ask about the secrets to success in business, a person who I could speak to today, it was Harrington. Over the past 30 years, he's helped launch over 500 products. Those products have generated well north of $5 billion in sales. As one of the original sharks on the Shark Tank, he's also the father of the infomercial.
Related: 8 Reasons a Powerful Personal Brand Will Make You Successful
How to Sell Anything to Anyone
There are so many facets to sales. I talk about sales because it's the foundation for success. To succeed, you have to know how to sell. Hands down, it's the most important skill you can have. Everything revolves around sales. If you're no good at sales, you'll have a hard time succeeding in business.
Sales is about influence. There are methods of persuasion that work very well in business. But, there are also several fundamentals that need to be in place if you want to succeed. If those fundamentals aren't in place, you can pretty much kiss your chances for success goodbye.So let's just call them secrets. Sure, they're fundamental. But, they're also categorically secret. Not in the terms of nobody knowing or understanding them. More so, people simply overlook them. And I knew, that if anyone had those proverbial secrets to success, it was Harrington.
Not convinced that sales is the basis for success? Just imagine for a moment what you're selling at any given moment. No, I'm not talking about products or services or information. I'm talking about selling yourself. You need to sell yourself at just about any point if you want to succeed:
- You need to sell a good college on why you would be a great fit
- You need to sell your skills to a potential employer to get a good job
- You need to sell a potential spouse or date on why they should be with you
- You need to sell your parents on why they should give you an allowance
- You need to sell your bank on why they should give you a mortgage
- You need to sell a landlord on why you would be a good tenant
Selling is everything. Everything. Hands down. Now, selling without holding steadfast to a variety of so-called secrets doesn't guarantee your long-term success. Sure, you'll make some short-term progress. But, not strides. There won't be exponential growth.
Related: Habits of the World's Wealthiest People (Infographic)
Secrets to Success in Business
If sales is the basis to success in business, what are the secrets to succeeding at sales? At the foundation of any business, there are quite literally five fundamental keys that you need to have in place. This is not just about building an irresistible offer. Yes, you need that. But, you need so much more in place before that's even concocted or created.
While there are ly dozens, if not hundreds, of secrets to success, these five are crucial. Harrington says that if you follow these, you can navigate your way to success in the long term. Not in the short term. Remember, this is about consistency in your approach. It's not about faltering or giving up or making excuses. It's about staying on the straight and narrow.
Related: 11 Habits of Truly Happy People
1. Create something of real value
Harrington talks a lot about value. It's the cornerstone to success. If you stopped to think about it right now, the richest people in the world have created the most value. Hands down, it's crucial if you're looking to win. So why is value so important you ask?
While some people might be able to sell anything, that doesn't guarantee long-term success. If you put your own needs first before the consumer's, you'll lose. Harrington says that whatever you sell, manufacture, create or dream up, do it with the consumer's best interests at heart. In other words, add insane amounts of value.
Think about this for a moment. Before most of the world's most successful companies ever made a dime, they added value first. connected the world through a massive social network. Google provided the most uncannily accurate search results before it ever enabled you to run an ad. And so on.
Related: 11 Ways Successful People Deal With People They Don't
2. Improve the lives of others
Not only should you deliver real value, but you should look for ways that you can improve the lives of others with whatever it is that you're peddling. Sure, you could sell anything to anyone for a brief period. But, if you're not improving the lives of consumers, you're really wasting your time.
By building products, services or information that improves the lives of others, you can quite literally transform your business and catapult it into the stratosphere. We're talking long-term exponential growth. Beyond anything that you could quite possibly dream of.
That doesn't mean you can't profit from your efforts. It simply means that you have to focus on improving the consumer's life first and foremost. That's the key or the secret to success here. Focus on that and watch as your business takes shape and reaches new heights. Ignore it, and watch it crash and burn.
Related: He Went From Dead Broke to Millionaire Because He Just Wouldn't Stop Trying
3. Be authentic and transparent
No one s a sleazeball. You can't sell anything. Don't be that guy (or girl) that people dread speaking to. The used car salesman. The underhanded low-balling greedy saleswoman. Don't be that person. Just don't. Instead, if you really want to succeed, Harrington says that you should be authentic and transparent.
Don't make unrealistic claims. People can see right through it. Instead, be honest about what your product or service or information will do. Use real-world reviews from people who've tested whatever it is that you're offering. Those testimonials go a long way.
Whether you're audience is millennials or baby-boomers, everyone can tell when you're being inauthentic. People aren't stupid. So don't take advantage of them by trying to be or say something that's not true. It's just a waste of time.
Related: 10 Qualities of Authentic People
4. Focus on positivity
While you shouldn't look to please everyone all the time, you should focus your thoughts on positivity. In other words, don't think negative thoughts. Yes, it's hard. But, it's necessary. If you begin to veer off to the realm of negativity, your entire life follows.
Considering that we have upwards of 60,000 thoughts per day and a large degree of those happen in the subconscious mind, if you don't focus your thoughts on positivity, you'll feel you aren't in control. You won't be in control of your destiny. And you certainly won't be able to make sales when you're in that headspace.
Harrington says that it's one of the most important pieces of advice he gives to entrepreneurs. You simply can't make progress if you're always focusing on pain rather than the pleasure of a positive outcome. Sure, business is hard. We all know that. But, it gets easier with time as long as you put in the work and keep a positive mindset.
Related: How Positivity Makes You Healthy and Successful
5. Follow the 80-20 Rule
The 80-20 Rule states that 80 percent of the results come from 20 percent of the efforts. In sales, this means that 80 percent of the sales come from 20 percent of the customers. It also means that, within the 20 percent of efforts, another 80-20 Rule applies. That translates to a very small amount of efforts leading to a very large amount of results.
Focus on that. Find the efforts that are producing the biggest results. This isn't about working long and unending days, toiling away or being the last one to always leave the office. This is about productivity. If you can find what works, you can scale it out. Think 4 Hour Work Week rather than 18-hour day.
Too many people think that the secret to success lies in working yourself to the bone. It doesn't. Just identify what efforts are producing the biggest results and scale. That's how you seriously scale out and grow any business.
Dangers When You Plan Business Plan
Before a month, I watch an interview with Mark Zuckerback the founder and CEO of on BusinessInsider.com. In this interview Mark Zuckerberg tells that they don’t need, and also don’t have time to write the formal business plan. The same I’ve experienced in practice.
While most books about entrepreneurship that I have read talk about the full formalization of the business plan, I’ve made a mistake several years ago as I was starting a business.
Such theory which I call “plan business plan” is completely wrong and in some cases opposed to what the practice required.
My Bad Experience When I Plan My Business
When I start a business, I have a business idea and sit down to write a business plan. And I write it very well. It looked very good with different color charts, analysis, tables. I was proud of myself for my success in making a business plan what I have learned from school.
But, when I re-read the plan I wanted to improve and make modifications. Well, it looks great. I must mention that the business plan wasn’t required to find funds from a financial organization or a business plan competition, but it was needed only as a roadmap or guideline about growing my new business in the next three years.
In such a way I simply forgot that I should stop dreaming and start with real actions.
I spent several months in which I always have something to improve on the business plan, and business normally didn’t start.
After several months, I have realized that my very well written business plan with colorized graphics, charts and tables don’t have practical value. That business plan ended up in the garbage.
What Was Next?
After that, I sat down and made a new business plan. The new business plan doesn’t look so good as a previous that finished in the garbage with color graphics, titles, and contents, abstracts.
But, with this new one I started the business, things have moved on. And after one month of the new business plan, the business began to bring revenue in my pocket.
That business plan was simply made of:
- Actions that I need to implement in next period. These are simple bullet points with action steps I need to take to implement my plan.
- What is missing in the market? These are also several bullet points related to the market and what is missing currently as value to customers and missing relationships I want to build.
- How much money I have and how much I will spend on the startup level of my business. One sentence that describes my finance condition and plans to ensure appropriate financing for the future. Additionally, I have added several bullet points that explain how I will finance my new business.
- What will I apply as marketing tactics in the first and second year as a strategy? – Several bullet points that explain 3-5 tactic I will use in the future.
This was enough, and now that business operates well and brings income.
Dangers That Come When You Plan Business Plan
I will summarize three serious threats when you plan business plan:
- Plan business plan if you want never to start your business. The very first sentence says something inefficient and ineffective. Why must we make something twice? Plan to plan!! It’s nonsense. Planning as a verb is an activity for the preparation of future action steps. And if you want to plan, and you plan to plan and again plan to plan. That’s a dangerous circle that never ended.
- Too much thinking takes too much time. Planning requires thinking of what the future will bring to you. If we stuck with this thinking of future, then tomorrow will come, and we will need to re-think the future tomorrows.
- Too much planning, less time for implementation. If we lose too much time in planning, we’ll reduce the time for taking real actions. Someone will tell you that if you have a better plan for the implementation steps, you can spend less time in respect of the implementation. However, this isn’t a simple math. This is a theory of probability that deals with random events. One thing is, sure enough, we can never be 100% sure about what the future would look . If the business idea is worth to start, you don’t have a time because you have an idea now, but also someone else probably has a similar idea ready to start.
The Recommendations Instead of Conclusion
- You need the business plan because it’s the only instrument that can transform your business potential energy stored in your business idea into business kinetic energy. However, the type of the business plan will depend on the purpose of that business plan.
- Avoid templates. I have a lot of templates that I found on the internet. However, my bad experience tells me that nobody can make a better plan than the entrepreneur alone.
- Be specific as you can in the business plan. With this, we can easily compare real results with the planned.
- Make it simple and understandable primarily for you and your employees. However, you’re the only one who will deal with implementation.
- Formalize only when you compete for finances at the financial organization, or if you participate in a business plan competition. In such a case when it came time to realization adjust it to your needs. However, you as an entrepreneur is the central figure in your business.
- Let your business plan serve as a roadmap for you and movement of your business.
How to Write a Business Plan: 8 Simple Steps to Success
This article is brought to you by OGScapital.com who can provide you with help from the best business plan consultants. OGScapital.com offers top-rate business plan development, consultancy and analysis, which is perfectly suited to your needs and budget.
Whether you’re planning on being the next young apprentice, facing the dragons in the den (the TV show that is) or are starting your very own business and need some sponsors, the first step is writing your personal business plan. But where do you begin? The good news is that you don’t need to spend days creating your strategy if you hire a professional business plan consultant that can help you put pen to paper and create your ideal business plan.
Even if you want to prepare it by hand, here are some essential steps you’ll need to take to ensure your plan stands out above the rest:
1. Executive Summary
This is the introduction to your business plan; it should be a summary of everything you will say in greater detail in the following pages. It should be captivating a story and set the tone; if the first chapter isn’t great, people will not keep reading. You should spell out the content goals of your developed plan, hitting all the highlights.
If you are using your proposal to get investors, this section is vital for you.
Be sure to include background information about your business, the market opportunity, your capital requirements, a mission statement, an overview of management, competitors, your firm's competitive advantages, and a summary of your financial projections over the next three years.
Top tip: Ensure that your executive summary doesn’t exceed three to four pages; you don’t want to bore the reader. Many business professionals write their executive statement last to ensure it summarizes everything that has been included in the plan.
2. Business Description and Overview
This section is designed for you to provide more information about your business. You’ll need to inform your readers about the purpose of your business.
Are you a new fashion brand focusing solely on sportswear for tennis players? Why did you decide to develop this company? You’ll need to prepare a mission statement, business model strategy and any existing strategic relationships. You must also include present outlook with future possibilities.
Think about other markets within the industry, will these new products and developments benefit or adversely affect your corporation?
3. Product and Services
Here’s where you talk about the sole reason for your business; the go-to product or service. You need to clearly discuss what you’re selling and why your product/service are better than the competition.
If you sell products, state whether you are the manufacturer, distributor, and retailer and give examples of your manufacturing process, availability of materials, how you handle inventory and fulfilment. It’s also important to include any patent, copyright or trademark information here.
The Work at home Woman said: “If you have plans for future expansion, including new products or services, include that in this section as well.”
4. Marketing Strategy
In this section, you spell out your marketing strategy, addressing details of your market analysis, sales, customer service, advertising, and public relations. You should explain how you reach your target customers.
What promotional tactics and digital marketing channels are you currently using? What brand positioning do you desire for each? Many businesses use this space to showcase their vision of why their business will be successful, backing that up with market research that identifies their target market, industry and customer trends. Include information on both your planned and historical marketing strategies.
5. Competitor Analysis
Competitor Analysis goes hand in hand with market research, in order to be successful, you must have a clear understanding of what opposing companies are providing.
Once you have done that you need to explain why and how you plan to achieve greater success than them.
Who are your competitors and what are each of their key strengths and weaknesses? In what areas will you have or gain competitive advantage and how?
6. Design and Development
This is the meaty part of your plan. Here you should provide details of your sales strategy.
What is your action plan? How do you think you’ll reach your target audience and dominate the market? The design and development should outline how you plan to operate the business throughout the entire cycle to reach its goals. Provide investors with a description of the product’s design, chart development and budget.
7. Operation and Management
If your business plan is designed to attract investors; you’ll need to include information on current executives and managers working for the company, along with examples of how they have reached your business goals.
“For investors, it's an important element to include who these people are and what their experience is,” said Tim Berry, president and founder of Palo Alto Software. The operations and management plan is aimed to describe just how the business functions on a continuing basis.
The operations plan will highlight the logistics of the organisation such as the various responsibilities of the management team, the tasks assigned to each division within the company, and capital and expense requirements related to the operations of the business.
Top tip: If you’re a small business, you should also include information on employees. If you’re planning on hiring, this section should also outline the organisational structure and responsibilities of the team.
8. Financial Factors
In the financial section, you provide the measurable income, pay-outs and profit of everything you stated in the previous seven sections.
This is where you include your projected profit and loss statements, balance sheets and cash flow for the next three years. It’s a good idea to consult a certified accountant when putting this section together.
The numbers here should back up everything else that you’ve claimed in your proposal.
Top tip: You should write this section once you have completed everything else in the plan to double check that your numbers add up correctly.
“A business plan will be the best indicator that can be used to judge your potential for success. It should be no more than 30 to 40 pages in length, excluding supporting documents” says Linda Pinson, author of Automate Your Business Plan for Windows.With that an in mind, if these eight steps are addressed well, you’ll be on the road to building company success.
A great business plan that’s formatted correctly and packed with ample samples is an indispensable ingredient to significantly increase your odds of succeeding as an entrepreneur.
Have you got any other top tips to business plan writing? If so, let us know in the section below…
OGScapital.com has helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.
8 Elements of a Successful Business Plan
Perhaps you’ve heard the old saying that failing to plan is the same as planning to fail.
It’s commonly attributed to Benjamin Franklin, the 18th century inventor and politician whose belief in the value of preparation was strong enough that he once made a list of more than 12 character traits around which he planned to structure his life.
Related: It Only Takes 6 Steps to Plan Your Success
Franklin’s preparation paid off. Today, he’s remembered not only for signing the Declaration of Independence but for researching electricity, serving as the U.S. ambassador to France and founding the University of Pennsylvania.
Accomplishments those illustrate the importance of preparation for entrepreneurs starting or expanding their own businesses, especially since only half of all startups survive their first five years. The secret: A well-crafted business plan can help make yours one of the success stories.
Not only is having one often a prerequisite for lenders and investors, it’s a road map that helps owners identify both risks and opportunities in their markets so that they’re prepared for both.
Indeed, some of the most successful U.S. entrepreneurs were known for their careful strategy. John D. Rockefeller, the oil magnate whose name became a byword for wealth in the late 19th and early 20th centuries, often talked about “our plan” when he was developing Standard Oil Trust.
Rockefeller’s strategy was corralling what had been a haphazard oil supply that often outpaced demand and hurt producers by keeping prices low. His business expanded enough that it eventually controlled the majority of oil production in the U.S. Although it was later broken up by the U.S. government, its descendants—ExxonMobil, Chevron and ConocoPhillips—still dominate the industry today.
“Business planning helps entrepreneurs work smarter, stay alert for roadblocks, test new ideas, stay motivated, help align expectations with stakeholders and investors, and even reduce stress.”
“Business planning helps entrepreneurs work smarter, stay alert for roadblocks, test new ideas, stay motivated, help align expectations with stakeholders and investors, and even reduce stress,” wrote Robert Price, executive director of the Global Entrepreneurship Institute, in an article on the organization’s website.
“Writing a business plan forces you into disciplined thinking if you do an intellectually honest job,” he says. “An idea may sound great in your mind, but when you put down the details and numbers, it may fall apart.”
Related: Think Big, Start Small and Plan for Success
A further advantage of your roadmap is that, ideally, it changes with your business. It’s considered a living document, but despite its adaptability, there are basic elements the Small Business Administration says any plan should contain. They include:
1. Executive Summary:
A snapshot of your plan. This will be the last thing you write, but possibly the most important, since many readers will stop here if they’re unimpressed.
If your company is a startup, focus on your background and experience as well as that of any partners to show the underpinnings of the company, the agency says.
If you’re better established, make sure to include details such as when the business was started, the names of the founders and their roles, how many employees you have, and where your operations are situated.
2. Company Description:
Explain what your company does and how it stands out from competitors. List major customers as well as markets you plan to target in the future. You’ll want to include competitive advantages, such as expert personnel the whiz-kid coder you just hired, or location: Perhaps your floral shop is next door to an all-night wedding chapel.
3. Market Analysis:
It’s crucial to understand the market you plan to enter. Find out who your competitors are, analyze their cash flow and profit margins, and research technological developments in the industry that might be game-changers. Part of describing your customers is a general awareness of how much they spend and when.
For instance, Black Friday got its name because it kicks off the lucrative Christmas shopping season that moves many retailers into full-year profitability.
If your business is grappling with a similar challenge, you’ll want to be sure you have the resources and cash flow to withstand operating at a loss for 11 months the year.
4. Organization and Management:
Spell out the details of ownership, including investors and show your organizational chart. Specify whether your business is a sole proprietorship, partnership or corporation, and if it’s the latter, what type.
5. Service or Product Line:
What do you sell, how will it help your customers, and how often will they need to replace it? The answers to those questions can be crucial factors in business sustainability. Include any patents or copyrights you own.
6. Marketing and Sales:
The best idea in the world won’t take off if you don’t let your potential customers know what you have.
Are you going to rely on word of mouth, promotional discounts or advertising? Remember, your method will have to be tailored to your market.
New York businesses are famous for paying people to stand on the sidewalk promoting everything from discounted pizza slices to bargain jewelry prices, but that doesn’t work nearly as well in cities without a high volume of foot traffic.
7. Funding Request:
You’ll want to include how much you need right now as well as how much more you might need over the next five years. A critical point is how you plan to repay borrowed money to creditors (if you opt for debt financing) or, alternatively, generate returns for investors. Both will want to know how you’re spending their money and when they’ll see a payoff.
8. Financial Projections:
If you need funding, provide realistic forecasts that show how you plan to generate future cash flow. Unless you’re borrowing from your parents, your funding sources will want to know. It’s easier if you can show recent financial statements and base your projections on those, since that will give lenders an idea of how realistic your numbers are.
Related: 11 Things That Can Spark Massive Success in Your Life
Making Your Business Plan a Success
Although a business plan is an essential document when applying for bank loans, just because you have a plan does not ensure you will get your loan.
To realise your dream of starting and managing your own business you'll need to ensure that the idea you have stacks up and your financial plans are realistic and detailed so any questions you can answer straight away.
Assessing the Risk
Banks are assessing the risk of lending to you and your business and there are just a few things they concentrate on when looking through your plan.
Mainly it's about *you* and your team, their experience and if the bank will receive all their loan back with interest.That means not only does your business need to succeed but your business plan needs to show the path to realistic profitability.
Banks see thousands of plans each year so yours needs to be good and here are the top five reasons why new businesses get rejected for loans, mainly because of their business plan but also because of the idea and the people behind it.
Mistakes Successful Plans Avoid
You can avoid all errors of judgement if you know what to look for when developing your plan. The top five areas where things go wrong are as follows:
- The format of the plan is not in the correct order.
- Your financial forecasts are unrealistic.
- Some key sections are missing.
- The product or service idea is critically flawed.
- The management team lack the right experience.
Here are those areas in more detail.
The Plan is Not Formatted Correctly
Bank loan staff must have to read hundreds of business plans in any year so they are used to a particular format, and they know what they are looking for (see below). It's no use going to meet your bank armed with a 200-page document that no one is ever going to read as it's a waste of your time and theirs.
Additionally if you only have a couple of pages with you, they may think you're not serious about your business idea and of course, it won't cover the essentials. Overall around 20 pages will suffice. You can download a template from the Teneric site that includes all the essential areas and is the formats banks want to see.
The Financial Plans Are Unrealistic
The most important part of creating a business and a business plan are the numbers and financial plans. If you've ever seen the BBC programme Dragons' Den, then you'll know what financial numbers investors want to look at and banks are no different.
If you can reel off the top of your head your revenues, profits and margins for the next three years, then you may be halfway there.
But most new entrepreneurs think their business is going to take over the world and be generating millions in just 18 months or so with a high percentage profit. Of course, only 1 in maybe 10,000 businesses will be successful this way, so be realistic.
The Plan Doesn't Contain Everything Required
the format section mentioned above, you need to cover off everything a loan clerk is looking for to analyse your proposal. They mainly want information about your products and services, information about you and your team and reliable financial forecasts that explain your business idea and why you need the loan.
It's best if you call in advance to find out what the bank is looking for in your plan so you can add in the required sections. One other way to ensure you have everything is to use a ready-made business plan previously developed for banks.
The Business Idea is Flawed
Of course, not every business idea is going to make a profit and banks know what type of businesses are the least risk and those that are the highest. You will know by writing your business plan if your idea is going to take off.
Starting a new company is hard work, and money and cash flow could be stressful in the initial months. Ensure your financial forecasts are realistic and present your ideas and numbers to family and friends for feedback – they will undoubtedly provide you with insight into your venture.
The people behind the business Are Inexperienced
Most new companies are successful purely because of the people behind them. In fact, most businesses *are* people businesses and if you and your team don't have the relevant experience, it's unly you'll get the loan, and it's questionable the venture will succeed.
There are ways of overcoming this by gaining the expertise or getting people on board that have the skills you require. These are all areas you can overcome. By spending time writing your business plan and developing sound financial plans you too can be starting your business and be successful.
Translating Your Idea Into Profit
There is no excuse for delivering a business plan that's not successful. So long as your idea is realistic, you can use business plan templates to guide you through the process of completing your document.