One of the most important early steps to take in starting or expanding a
business is to write a business plan. A Business Plan is a description of your
business, including your product or service, your market(s), your people, and
your financial needs. There are three major reasons why you should take the time
to create a written business plan.
The first reason is that the process of putting a business plan together,
including the thought you put into it before beginning to write the plan, forces
you to take an objective, critical and unemotional look at your business project
in its entirety. It is a useful management tool that can help you plot a course
for your company’s start-up and initial growth.
A second advantage that comes with having a written business plan is that the
finished product, your business plan, is an operating tool which will help you
manage your business and provides a means to measure your success.
A properly prepared business plan is a vital sales tool you will use to
impress potential investors with your planning ability and your general
competence as a manager and a businessperson. Since many businesses only start
or expand through borrowed monies, the presentation of reliable and complete
information in a business plan is essential.
What A Bank Looks For In A Business Plan
The Business Plan is an excellent tool to present to a banker when financing
is needed. A good business plan tells the banker that the applicant has put a
great deal of thought and effort into this decision. A well-presented business
plan will let the banker know that he is dealing with a serious, well-informed
prospect, giving him more faith in you as an entrepreneur.
If a business plan is to be submitted to a bank, it is important to realize
how a banker analyzes a business plan and what questions he or she will ask
during this analysis. A banker’s job is to assess the degree of risk in each
proposed loan and to be satisfied that the borrower, while still allowing the
businesses to operate profitably, can repay the loan. A banker does this by
analyzing a number of things:
- The Nature of the Business
- The Purpose of the Loan
- The Amount of the Loan
- The Ability to Repay the Loan
- Your Business Management Ability
To convince a banker or investor of the merits of a loan request, a borrower
must present complete, well-organized information, which addresses these and
other concerns. It is important to remember that the proper packaging of a loan
proposal can be an important step in getting it approved. The Small Business
Administration (SBA) has several sample business plans, as well as many other
publications, on its publications web site at:
http://www.sba.gov/library/pubs.html. Office Depot has a Business Plan
section in its’ “Small Business Handbook” on-line at:
http://www.officedepot.com, and over 60 (sixty) sample business plans are
available at: www.bplans.com
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