A business plan serves two essential functions. First, it is the first step most banks or other sources of private capital require prior to making a decision regarding a loan or allocation of start-up resources. Second, it allows individuals to analytically evaluate the feasibility of a new business venture or the expansion of an existing endeavor. While each business plan will be unique based on a variety of factors, every successful plan does have certain commonalities.
Every business plan should be based on exhaustive market research, evaluations of product validity and an unbiased evaluation of operator expertise. The market is flooded with failed projects that were based on “good ideas” with a minimal amount of supporting data. Diligent research is often the difference between a minor waste of time and resources and a catastrophic failure.
The first of the concrete sections, an executive summary is a brief outline of a business projects goals and objectives with corresponding strategies. It also often includes the organizational mission and vision as well as a description of why the relevant parties are qualified to initiate the project.
This section of the business plan outlines the strengths and capabilities of the managerial team. This is an honest evaluation of their demonstrable skills and experience as well as a summary of the managerial team’s weaknesses. When applicable, this section should also include a detailed plan for addressing key weaknesses either through outsourcing, professional training, or the hiring of additional full-time members to the management team.
Every business plan should be written as clearly and directly as possible. It is not a marketing campaign or an attempt to sway public opinion. It should be short, concise, and based as much on empirical data and conservative estimations as possible. It is very easy for experienced investors or bank officials to determine when a business plan is full of fluff and vague generalities. Additionally, it is important that the writer of the plan honestly evaluate the quality and validity of their own ideas. Filing an application on www.loanbuilder.com, or any other business loan website, is a great way to make an initial evaluation on the quality of your business.
The market analysis section is a brief summary of the relevant research. When possible, it should show how key goods or services are underrepresented in a specific market and how the organization plans to capitalize on the under-representation.
The most important part of writing a business plan is for the relevant parties to maintain an air of detachment. It is very easy for potential owners to fall in love with a particular idea and allow their emotions to shape the way they evaluate and represent data.