If you go to a bank to request a loan to start a business, you need a business plan. If you already have a business and you go to a bank to obtain funding to expand the business, you don't usually have to write a business plan for the occasion but your chances of getting your loan approved would be higher if you have it.
The reasons for writing a business plan may be different:
* To describe your new business
* To secure funding such as bank loans
* To attract investors and therefore increase equity
* To define strategic objectives and how to achieve them
* To review the company status and to adapt a development programme in accordance with the internal and external changes.
What is included in a business plan?
The business plan must prove that your business will bring in enough income to cover expenses and to pay the owners. If you write a plan for your colleagues and partners to expand your business, you should focus on the technical side, rather than financial one. If you write a plan for the bank, the most important aspect is your financial plan. Are your plans feasible? Will there be sufficient cash flow to cover your monthly loan payments? If your business brings in $ 1000 per month and your loan payments are $ 1200 per month, the bank is unlikely to approve your loan application.
If you write a plan for a venture capitalist (an angel investor), the most important factors for him are the manpower, skills and experience of the management team as well as fresh and promising ideas.
What does a successful business plan look like?
* A well thought-out idea presented in a brilliant creative manner
* A project clearly and briefly described
* A text with a clear-cut logical structure
* A vivid picture of how the management team can create and develop successful businesses
* Attractive return on investment for the chosen industry
It is possible to say that your business plan is your key to success, which can open any door for you. It will help you to convince investors and banks that you can bring your business to the success it deserves.
But in addition to clear-cut structure and detailed cost-efficiency calculations more mundane things are important, too:
- Make sure your business plan is printed on quality paper;
- Check the spelling and grammar and accuracy of your calculations. Any reader who sees errors of this sort in your plan will wonder, whether you can make business mistakes, too. So do not underestimate the impression your business plan makes on its readers and to pay special attention to it.
A great business plan is the best way to show bankers, venture capitalists and other investors that your project is worth funding. Make sure your plan is clear, precise and feasible. In this case you will prove to them that you have the tools, the talent and the team to make your ideas work.