The short answer is 'yes.' A business plan is required.
If you haven't articulated your business goals, how will you know if you're succeeding? "What type of detail do I require in my business plan?" is the real question every business owner should ask. Alternatively, "do I require a working capital loan?"
Whatever skills an entrepreneur brings to the table – some of us are good at sales, some of us are masters of our craft, and some of us are masters of machinery, systems, and processes – we all have to start somewhere.
Successfully running a business entails:
Identifying your company's drivers;
Measuring and analyzing operating results; and
Making necessary course corrections
But do you need to pay a professional or an MBA to prepare your business plan?
Definitely not. If you don't have any experience with business plans, you should seek assistance from someone who has. As a result, you'll be best served by participating as fully as possible in the development of your own business plan. It will assist you in better understanding your business and allowing you to chart your course using more accurate data.
A 50-page, leather-bound business plan is not required for most people. When we provide financing to new businesses, we ask the owners to give us a point-by-point description of themselves and their company.
Here are some suggestions for writing your business plan:
This could be the checklist you use to ensure you know what to expect in your first few years of business ownership:
What is your professional background?
Actual experience in the same or similar industry gives you perspective and instills confidence in your investors and lenders.
What business experience do you have?
Nothing compares to owning and operating your own company.
Managing someone else's business to gain experience is the best substitute for the real thing.
Potential investors care about track records.
How much of your own money do you put into the company?
Investors want to see "skin in the game" from you.
It demonstrates that you are committed to seeing the company through difficult times.
It demonstrates that you have the ability to save and stick to a budget.
What amount of debt and equity do you intend to raise from others?
Be realistic in terms of numbers and capital costs.
If this were someone else's company, how much would you put in? What kind of profit do you anticipate?
Your company must be able to pay off its debts.
What are your products and/or services? What makes your company stand out?
These are crucial data points for your forecasts.
Do you offer a new product or deliver it in a unique way? What is your product or service's addressable market? What services do your competitors provide?
The size of the overall market for what you sell, as well as what your competitors are doing, will determine how much of it you can realistically capture.
This is yet another important factor to consider when making projections.
Your assumptions for the inputs to your projections will be tested by potential investors.
Most investors will immediately reject your request if your assumptions are incorrect.
Where will you find your clients and customers?
A business owner must know how and at what cost to acquire customers.
An income statement and cash flow projection at a high level.
The King of Money is Cash.
You must know how much money you will make and how much money you will need.
You must know how much money you will make and spend.
Do you need a working capital loan to get your business up and running, or to take it to the next level, as a follow-up to the above?
Share it with People You Can Trust
Share your plan with as many trusted friends and family members as possible once you think you've got it down. If you want to do something different, limit the amount of information you share. Just in case, have everyone sign a Non-Disclosure Agreement. Invite others to comment on your strategy, and use their feedback to improve it. As you gain a better understanding of the industry and your company, make adjustments. You should refer to the plan and correct the course even after you've launched.
Furthermore, while there are common elements to success in almost any business, it is beneficial to hire professionals (such as your lawyer and accountant) who work with other clients in your industry. There's no substitute for real-world experience and knowledge. They can help you set up your business structure and books, as well as introduce you to others who can assist you.
Also, keep in mind that you are not alone on this journey. Every member of the Raptor Financial Group is dedicated to assisting our customers in growing their businesses. Please contact us with your plans. We would be delighted to assist.