BankerGirl

Posted by Heidi on May 1st, 2008 in Entrepreneur, career, loans

This is the second of a multi-installment series on starting your own business.  If you’d like to start reading this series from the beginning, click here. 

Most entrepreneurs don’t go into to business for themselves to fill out forms, complete pro forma financials, or write a business plan.  For these individuals, paperwork seems to be nothing more than a hassle or a waste of time.  Unfortunately for most new business owners, a business plan is important and necessary to secure for financing - there is no way most banks, credit unions, venture capitalists or angel investors will loan business owners money without one.

A good business plan, if written and executed correctly, should be both a roadmap and a compass.  It shows the principals within the business where the firm is heading and provides documentation of goals, objectives, and metrics required to perform periodic look-back analyses. 

Before writing a business plan, an entrepreneur should be able to answer the following questions:

1.    What’s your “elevator speech” for you idea?

2.    What purpose does your business serve?  What is your unique value proposition?

3.    How will you market your firm’s goods and services?

4.    How will you finance your business?

5.    What are you goals for growth?

6.    How will you measure your success or failure?

7.    What qualifies you to manage this business?

Once a business owner can answer these questions, it’s time to dig into the three most important components of a business plan:

•  Financial section - include a breakeven analysis and five-year pro forma balance sheets and income statements

•  Marketing section - thoroughly describe the target market segment(s), the marketing plan, and communication tactics.  Clearly articulate strategy for the 4 P’s (product, price, placement, & promotion)

•  Principals’ resumes - include a CV to detail each business owner’s experience and work history (supply these for each owner with a 20% or greater interest in the company)

I also encourage borrowers to include a well-written executive summary (answer who, what, when, where, why, and how questions) and an introduction page that details the general business concept/vision, mission, and objectives of the business.  Remember that objectives should be quantifiable.

If you’re serious about securing financing, I encourage you to take a look at this list of templates provided by SCORE (for those of you unfamiliar with SCORE - it’s a wonderful resource for anyone looking to start their own business).

I will provide more information about SCORE and other resources for small business owners in my next installment of the Entrepreneur’s Guide.

Stumble it!