Why Have a Business Plan?

Chances are, if you've ever wanted to apply for a loan to start a business, you would have been required to write a business plan. For many, this task can be painstakingly complicated. Our purpose here is to break down the plan into a comprehensive outline. Your business plan will provide you a road map to success. It is among many things, a tool for measuring and improving performance, a base for sound business planning, educating and motivating key employees, steering your company where you want it to go, and a strategic vision of your company communicate your business to others

Refer to it often, rethink it and update it often as your environment changes (every 6-12 months). It sets goals and objectives and develops an operating plan to describe specific strategies and tactics to achieve your goals and objectives and outlines the financial aspects. Perhaps after writing your business plan, you may find the project is not feasible. Think of all the time, money and headaches you saved by planning first. Hopefully, your business plan will show that there is a market for your idea/product/service and now that you have the map, you can find success in business too!

Strengths of a Business Plan

Evidence of Focus: you are not spread to thin
Evidence of Customer Acceptance: who your target market is & how they perceive you, what problem(s) are your customers having and why they will pay you to solve it
Appreciation of Investor Needs: know what your investor is buying, is he looking for a return every year or long term growth, will they buy you out or do they want you to build your resources to buy back their share
Understand Yourself: what do you want out of this business, do you realize how much time it will take out of your everyday life to operate and maintain this business, realize that it is you not your family who is in business

What do Financiers look for? 5 C's!

The five C's of credit are:

1. Character. Lenders want to lend to people who are trustworthy, reliable, and have a history of meeting their financial obligations.
2. Cash Flow. Lenders want to lend to people who are able to repay the loan based on present and anticipated earnings balanced against existing debts.
3. Collateral. Lenders want to know that their loans are secured by assets such as real estate, equipment, inventory, receivables, stocks, etc.
4. Credit Worthiness. Lenders want to know that your personal credit history as well as that of your company and your partners is solid.
5. Capital. Lenders want to know the net worth of you and your company.

When preparing your loan proposal be ready to answer questions on the five C's. This is one time when getting the C's on tests is the best score you can get.

Credit reports do not always have to be flawless. Life brings unexpected events, sometimes one may fall behind. What is important, is do we have the character to repay what we promised, even if it is later then originally planned.

• Venture Capitalists look at the management experiences, financial, market analysis
• BA looks at owner's track record/background (character), collateral, financial, market analysis
• anks look at resume and experience, equity, collateral, marketing plan and financial ability to repay and positive cash flow.