For most entrepreneurs - it is because their bank says so
The number one reason entrepreneurs provide a business plan is because their bank has asked for one. Put yourself in their chairs...would you lend money to someone with a lot of great ideas-all in their head and maybe a few numbers scribbled on a napkin? Maybe you would, but banks and funding institutions definitely do not.
So why do they put you through this enduring process? Everybody wants the answers to these absolute questions:
1. Is there room for entry in the marketplace for your business
(what is the opportunity)?
2. How will you make it work?
Or more specifically - banks address these questions:
Will your business be able to pay back the loan it's borrowing within a specific time schedule?
Will your business be able to pay the rest of its bills regularly without having to borrow more money to do so?
What collateral (security) is available from the entrepreneur in the event the loan cannot be paid?
What is the entrepreneur's credit history like - have you paid previous loans back and on time?
WHAT YOU CAN EXPECT!
A well researched marketing plan;
A realistic, logical, reliable, easy to follow financial plan;
Excellent customer service;
To be involved with your own business plan;
No surprises!
Follow through with bankers and other government agencies - increasing the likelihood securing commercial financing and/or any other funding you're after;
OPTIONS!
The complete deal --- everything your bank (or any other funding institution) is looking for
The business plan will, if relevant to your venture, include the following items:
1.0 An executive summary outlining:
A summary of the proposed venture,
A breakdown of proposed costs requiring financing with requested financing,
Highlights from the financial projections.
2.0 An overview of the venture:
A description of the project and requirements,
The business profile,
Illustration of the opportunities and benefits pertaining to this project,
The entrepreneur's business strengths and weaknesses,
A risk analysis.
3.0 A market plan:
Trends of the industry,
The target market, size of the market and projected market share,
Products, services, and prices,
The advertising campaign,
Revenue projections,
Competitor's profile.
4.0 The operational plan:
Details of the business location including the lease agreement,
Production requirements / capacity,
Required inventory and suppliers
Environmental Issues,
Insurance, licenses, permits, and regulations.
5.0 A human resource plan:
Owner's experience, accreditations, and responsibilities,
Staffing requirements with projected salaries,
Business support.
6.0 A financial plan:
A breakdown of the project costs and requested financing and contributions,
Projected three-year financial statements including: the income statement, the balance sheet, cash flow statement, change in financial position statement, break-even statement, and loan schedules,
A financial analysis,
Industry ratio comparison,
A contribution margin analysis (if applicable),
Buying versus leasing (if applicable),
A sensitivity analysis.
"Market Analysis" --- perhaps you just want an analysis of the marketplace as a preliminary step:
A market plan including:
Trends of the industry,
The target market, size of the market and projected market share,
Products, services, and prices,
The advertising campaign,
Revenue projections,
Competitor's profile.
"Financial Projections" --- perhaps you want to write your own business plan and you just need some help with the numbers:
A financial plan including:
>> A breakdown of the project costs and requested financing and contributions,
>> A financial analysis,
>> Industry ratio comparison,
>> A contribution margin analysis (if applicable),
