A small business's success or failure is determined on its business strategy. A well-thought-out strategy lays out a clear path for the future, forces you to consider the viability of a business idea, and can help you gain a better grasp of your company's finances and competitors.
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A business plan normally spans three to five years, outlining all of your objectives and how you intend to accomplish them. A business plan demonstrates you're prepared and have thoroughly researched your business idea if you're applying for a loan or looking for investors.
A good business plan will walk you through each step of beginning and running a company. Your business plan will serve as a road map for how to establish, run, and grow your new company. It's a method of considering the most important aspects of your company.
Company plans can assist you in obtaining funds and attracting new business partners. Investors want to know they'll get a good return on their money. Your business plan will be the instrument you use to persuade others that working with you — or investing in your firm — is a wise investment.
It's tough to show the bank how you'll repay the loan if you don't have a financial forecast, which is part of the business plan.
1. A brief summary
The first page of your business strategy is this. It should include a goal statement that outlines your company's principal purpose, as well as a brief description of the products or services you offer, basic information about your ownership structure, and a synopsis of your plans.
2. A description of the business
This section gives you a quick overview of your small business. It comprises vital information such as the company's registered name, addresses of any physical locations, the names of key people in the firm, the company's history, the nature of the business, and more information about the products or services it offers or will offer.
3. A mission statement or a set of company objectives
An objective statement should clearly identify your company's objectives and include a business strategy for achieving them. It lays out exactly what you want to achieve in the short and long term.
If you're searching for outside investment, this section can help you explain why you need the money, how the money will help your company expand, and how you plan to meet your growth goals. The idea is to give a detailed explanation of the possibility and how the loan or investment would help your business expand.
4. Organizational and management structure
Here, you'll mention your company's legal structure (sole proprietorship, partnership, or corporation), as well as significant employees, managers, or other owners. It should also indicate the percentage of ownership held by each owner, as well as the level to which each owner is involved in the business.
5. Services and products
You can describe the items or services you offer or plan to offer in this section. The following items should be included:
A description of your product or service's operation
Your product or service's price strategy
The typical clients you work with
Your distribution and sales strategy
Why is your product or service superior to that of the competition?
How do you intend to fulfill orders?
You can also talk about any existing or pending trademarks or patents that are related to your product or service.
6. Sales and marketing strategy
This is basically a description of your marketing strategy and how you intend to implement it. Here you can discuss how you want to persuade clients to acquire your products or services, as well as how you intend to build customer loyalty and repeat business. This section can also emphasize your company's capabilities and focus on what sets you apart from the competitors.
7. Financial examination of a business
If you're a startup, you might not have a lot of financial information yet. If you're applying for a small-business loan, you'll need to provide income or profit-and-loss statements, a balance sheet listing your assets and debts, and a cash flow statement showing how money enters and exits the company.
The percentage of revenue kept as net income is known as the net profit margin.
The current ratio is a metric that measures your liquidity and ability to repay loans.
Accounts receivable turnover ratio: a metric that measures how often you collect receivables each year.
8. Budget estimates
If you're looking for funding or investors, this is an important aspect of your company strategy. It explains how your company will make enough money to repay the debt or provide investors with a reasonable return.
You'll offer monthly or quarterly sales, expenses, and profit forecasts for at least the next three years, with future amounts assuming you've gotten a fresh loan. Before making projections, thoroughly examine your previous financial accounts.
Your objectives should be ambitious, but they should also be achievable. "If you can justify it, it's OK to be optimistic. You don't want to stand out in a negative way by being overly optimistic in general."
You'll need to demonstrate that your company can generate enough cash flow to satisfy the loan's scheduled debt payments. But, you should also handle the business's numerous risk concerns.
The loan officer will want to know that you've considered all of the potential dangers and that you've taken steps to limit those risks.
9. Appendix
Include any supporting documents or information that you couldn't fit elsewhere, such as essential personnel resumes, licenses, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit histories. If the appendix is lengthy, a table of contents should be included at the start of this section.
Choose a business plan format that suits your needs.
There is no one-size-fits-all approach to writing a business plan. What matters is that your plan fits your requirements. The majority of business plans are classified as either traditional or lean startup. Traditional business plans are more prevalent; they follow a regular format and urge you to go into great depth in each department. They usually necessitate more work up front and can go into the hundreds of pages. Although lean startup company plans are less popular, they follow a similar format. They concentrate on outlining only the most relevant aspects of your plan's major features. They can be made in as little as an hour and are usually only one page long.
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