Category Archives: Writing a Business Plan

Nine Tips for Preparing Your Business Plan to Put Before a Money Lender

By Dan Boudreau

There are many reasons to prepare a business plan, but the most popular is to get money to advance your business goals. At some point, most businesses will need to borrow money in order to grow. When that time comes, you’ll want to arm yourself with a bulletproof business plan.

Here are nine things you won’t want to miss as you ready your business plan to romance your lender.

  1. Describe Your Business. State your business vision and mission, and clarify how the business is structured, what you sell, and how it works. Weave these things together to create a snapshot of your current situation and be sure to tell why you need money and how much you need.
  2. Write Your Business Goals. Set goals for the term of the loan, including: sales targets, net profits, the number of units to be sold, new products or services, how you’ll diversify your business, and how many new clients you’ll add.
  3. List Your Customers. Describe your customers and the problem your business solves for them. Clarify who they are, what they want, and their main buying motives. A lender will want to know that you understand who you’re selling to.
  4. Describe Your Competitors. List your competitors and compare them according to the products or services they sell, how their facilities are arranged, how many workers they employ, and how long they have been in business. Explain how your business differs from the competition, and clarify why customers buy from you.
  5. Beef Up Your Biography. Provide a summary of your credentials and experience, including relevant academic, work, and business achievements. Feel free to toot your own horn by listing your strengths and successes—highlight your history of following through on your business plans and commitments.
  6. Plan Your Cash Flow. Cash flow is most easily created using a spreadsheet program. Determine the flow of cash into and out of your business—monthly for the term of the loan you hope to borrow, at a minimum for the first year. Key to your business plan, a cash flow forecast will clarify how much money you need to operate each month, as well as showing how you will pay back the borrowed funds.
  7. Project Your Income. While a cash flow projection shows how much money will be in the bank at the end of each month, pro forma income statements show whether or not your business is expected to be profitable in the future.
  8. Explain What You Need The Money For. In your business plan, show how you will use the borrowed funds. If you’re buying equipment, list the items and support your request with quotes. If you need an operating loan, your cash flow should show how much you need and when.
  9. Offer Security. Most small business owners will only be able to borrow against what they already own or can offer as security for the loan. Most often this means providing a personal guarantee and offering equity as security in the event you fail to make loan payments.

Finally, be prepared to invest a minimum of 20 to 50% of your own funds or equity into any venture or project for which you wish to borrow money. Lenders will want you to have enough skin in the game to ensure that you’re motivated to make payments and follow through on the promises made in your business plan.

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Writing a Business Plan: The Dark Art of Predicting The Future

By Dan Boudreau

The strongest resistance to business planning typically comes from diehard pessimists, who ask, “What good are my 3-year financial projections if I step off the curb tomorrow and get hit by a bus?”

That’s a great question that will stop anyone from ever doing a business plan. And it seems logical enough, until you consider that everything great that happens in the world comes about because somebody decided to make an impact on the future.

Truthfully, you might be the most unpredictable element of your business plan. Here are a few of the ways in which you can become the real wildcard in your business plan.

  1. You might not believe you can succeed, which is the kiss of death for any business. Your lack of belief in your business assures its failure.
  2. You might hate managing people, which is impossible to know until you try. Business owners need to be skilled at managing several groups of people; employees, customers, suppliers, and creative teams.
  3. After going through all the effort of getting your business started, you might discover that you really want to work for someone else and not carry the responsibility of owning and running a business.
  4. You might discover that you can’t turn the business off, that you simply worry about it until you burnout.
  5. You might learn that you’re not a salesperson. Not everyone is, but successful business owners are.
  6. As the owner of a business, you might find that the activities that fill your hours and days—marketing, selling, logistics—are things you really don’t enjoy. This leads to artists who insist on doing all art while ignoring the business. It happens to the technician who gets immersed in his profession and refuses to get out and market his business.
  7. You might learn that you’re hopeless with finances, and that you’re missing some of the necessary knowledge and skills to manage your business—how to prepare a cash flow forecast, how to read an income statement, how to keep records.
  8. You might discover that you’re disorganized, and that you dread having to plan your days, weeks and months. Does freedom unleash your creative spirit, or do you self-destruct when faced with an open road?
  9. After getting immersed in your business, you might discover that you work too long and too hard for the amount of money you earn. It’s true that many small and micro businesses never get fine tuned to the point of earning a profit; too many evolve into a twisted form of enslavement.

Any business worth its salt will present its owner with many learning opportunities. Each speed bump can be taken as an opportunity to learn and grow; or it can be the roadblock that motivates you to change direction and get a job.

It seems insane to attempt to predict the future, but it seems even more so to accept a life of drudgery in a dead end job. For those who aspire to improve their work life by working at something they enjoy, business planning is a great place to start, even if it seems a bit crazy at first.

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Article Archive: Entrepreneurship