Suppose your company only exists in your imagination. In that case, it will be difficult to persuade lenders, investors, and shareholders that it is legitimate and that the money you are given will be wisely spent. This is why you should build a business plan. This widely recognized management tool is a written document that describes who you are, the project you want to accomplish, and how you will manage the risks involved and deliver the expected returns. People often mistakenly believe that only start-ups or those seeking financing should make business plans. This tool is essential to the good management of any business.
Write a comprehensive yet concise plan
Many entrepreneurs claim that drafting a business plan is a time-consuming activity that can take hundreds of pages. On the contrary, it should be short but detailed, providing all necessary details for its valuation. It should prove that you have the ambition, experience, skills, and confidence to lead. Well, your project.
Here are the main things you should include:
Description of your project
Indicate precisely who your customers are, the industry of your company, what it sells, and your growth plans.
Your unique selling point
Explain in detail in the best way why customers should buy your product or service. What more can your business, product, or service offer customers?
Analysis of your target market
Show the lender that you are well prepared. Market research will help you understand your customers' needs and provide them with a product or service that meets them. Provide information on your target market, your customers' demographics, and information on the competition and your distribution methods. If you want a good lifestyle, then you should buy luxury apartments in Lahore.
Key competitive intelligence
Describe your competition's strengths and weaknesses and indicate how your product or service will be better than theirs.
Organizational structure
Use organizational charts that indicate the roles of key leaders and the expected size of your business.
Human resource requirements
Indicate how you plan to recruit and retain your employees or use subcontracting.
Premises and equipment
Evaluate the company's needs in terms of premises and capital goods (equipment, technological tools).
Financial data
Make sure to modify the information according to the recipient. For example, your bank will want to know how you will pay off the loan or overdraft, how you will use the loan, and how it will help your business grow. Prospective investors will also want to know the expected return and funding sources, and shareholders will want to know the share price and the dividend they can expect to receive. Generally speaking, lenders, shareholders, and investors want you to provide numbers and other information to support what you are saying.
· Include your personal and business equity (assets minus liabilities), so the lender can judge your ability to repay the loan.
· A banker will also examine your credit history to see if you are reliable. Check your credit report established by the credit reporting agencies.
· Indicate your assets, the property you will give as security for the loan. Bankers will demand investment from you as proof of your commitment. (The amount you invest may belong to you or be provided by those close to you.) Money attracts money.
· Indicate cash flow forecasts, that is, how much you will need to run your business: technology, inventory, equipment, human resources, etc.
· Provide a financial forecast for at least two years and indicate the size and potential of the market.
· Provide details as to how you will complete your project. It would help if you established clear responsibilities, indicate real deadlines, and establish realistic budgets.
· Describe your financial control systems (inventory planning and debtor and creditors management).
Judicial aspects
Consider issues like taxes, liability, legal form (sole proprietorship, partnership, corporation, incorporated business). If you are buying an existing business, clarify the issue of buyout agreements. Have a lawyer review contracts and other legal matters.
Highlights
Lastly, write a summary of your business plan (a page or two will suffice). Please let there clearly whether it is a new business, expanding an existing business, or buying a business.
You could also include:
· The sector of activity of your company
· Your unique selling point
· The target market
· The main goals of your business
· Management history
· Project deadlines
Some pitfalls to avoid
· Being too ambitious: you must be able to justify your assumptions and forecasts.
· Hide your financial difficulties: Let your lender know if, for example, your sales fluctuate. Perhaps a flexible repayment schedule might be more suitable for you. A transparent business plan will increase your chances of gaining bankers and investors' trust, whether associates or third parties.
· Providing misinformation about the leadership team, a hastily written marketing plan, unrealistic forecasts, or incomplete presentations.