A business plan can be a key tool to convince lenders and partners that your projects are serious. Here’s how to prepare a winning one Show
14-minute read Share A business plan is a crucial document for every company. It tells bankers, investors and others who you are, how you do business and what your finances look like. “A solid business plan can be an effective tool for companies at all stages from start-ups to mature firms,” says Chad Fryling, who coaches businesses on preparing business plans. Fryling is Entrepreneur-in-Residence at Futurpreneur Canada, a non-profit organization that provides advice and start-up financing to aspiring entrepreneurs, in partnership with BDC. Bankers and investors, for instance, often ask for a clear, detailed business plan when deciding on a loan or investment for a company. The plan gives key information they need to decide if a business is a good risk or opportunity. A business plan can also be useful internally to align your team. Free business plan templateUse our template to write a concise, structured and well-documented plan. Download our template The business plan template will be sent to you by email.
Email address First name Last name Business phone Job role Company name Industry Annual sales Established in I also accept that BDC send me, via email, information about business advice, solutions and events. You can withdraw your consent at any time. DownloadA solid business plan can be an essential tool for companies at all stages from start-ups to mature firms. Chad Fryling Entrepreneur-in-Residence, Futurpreneur Canada Fryling often sees business plans that lack key elements, sufficient detail or realistic financial assumptions. He recommends using a business plan template to create the plan. “Using a template helps ensure that you cover all the bases and don’t forget essential details that bankers, investors and others expect to see in a business plan,” he says. “That helps establish your credibility and make a strong case for your company.” What is a business plan?A business plan explains how a company brings in money and is run day-to-day. There isn’t a single standard format, but most plans cover these four main areas:
Many plans also include an executive summary with an overview of your project and a simple explanation of your activities. Business plans can be written for different audiences, but they’re primarily prepared for lenders, investors or shareholders. It’s important to tailor your plan to the audience. Investors and shareholders often want to see an exciting potential return and ambitious business goals. It’s common for people to try to convince the lender that they’re going to make a lot of money. That can actually have an adverse effect. Chad Fryling Entrepreneur-in-Residence, Futurpreneur Canada Meanwhile, lenders generally want to know how they’ll get repaid and that the business owner is prepared enough to leverage the money effectively. They like to see conservative assumptions about your sales forecasts and market, different scenarios (good, neutral and bad) and contingencies in case things don’t go as planned. “It’s common for people to try to convince the lender that this is an amazing opportunity and that they’re going to make a lot of money,” Fryling says. “That actually can have an adverse effect on the people reading the plan. They might think the business owner is too optimistic and doesn’t know what they’re getting into.” What’s in a business plan?Business plans generally cover four key areas. The information may be arranged in a different order or format, but the basic details are usually the same. 1. Company profileThis section gives an overview of your current company or business idea. It typically includes:
People say their product is good for anybody 18 to 65 years of age. That’s too general. Chad Fryling Entrepreneur-in-Residence, Futurpreneur Canada
A lot of people think their product is so good it’s going to sell itself. That’s just not good enough reasoning. Chad Fryling Entrepreneur-in-Residence, Futurpreneur Canada 2. Sales and marketing
3. Operations
I won’t look at somebody’s business plan unless they’ve at least made an attempt at financial projections. Chad Fryling Entrepreneur-in-Residence, Futurpreneur Canada 4. FinancialsInclude a cash flow forecast, usually broken down on a monthly basis and presented as a spreadsheet. Also add your financial statements (balance sheet, income statement, cash flow statement and statement of retained earnings). And if you’re a new business, list start-up costs. The cash flow forecast is especially important. Fryling calls it the heart of the entire plan, but says many companies fail to include it or complete it as an afterthought. “I won’t look at somebody’s business plan unless they’ve at least made an attempt at financial projections,” Fryling says. “The real story happens in the financials. In the written part, every section mainly serves to explain and justify those numbers. A big part of the education we do as advisors is getting businesses to do the numbers at the same time as they’re writing the plan so they’re aligned with each other. It’s also not a bad idea to start with the numbers and then complete the written part.” 3 common business plan mistakes to avoid
How long should a business plan be?There’s no standard length for a business plan. “It’s more about the quality than the quantity,” Fryling says. “Many people can write a lot and say very little. “I’ve seen excellent business plans that have just a paragraph and point-form bullets for each element and a few charts. But then I’ve seen people with a 100-page business plan that was absolutely ineffective because they focus on writing a story and making it sound good, but there’s no substance to it.” What’s the difference between a business plan and a strategic plan?A business plan isn’t the same as a strategic plan. Companies should have both types of plan. A strategic plan defines a future desired state for the company and prioritized initiatives to achieve it, including a detailed action plan. The audience is your team. The plan is usually developed through a collaborative process that aligns your team around goals, prioritizes projects to achieve them and defines an action plan to execute the projects. What is the difference between a business plan and an opportunity assessment?An opportunity analysis plan is not a busi- ness plan, as it focuses on the idea and the market (the opportunity) for the idea—not on the venture. it also is shorter than a business plan and does not contain any formal financial statement of the business venture.
What is the difference between an opportunity and an idea quizlet?What are the differences between an idea and an opportunity? An opportunity is a favorable set of circumstances that creates a need for a new product, service or business. An idea is a thought.
What does the third section of an opportunity assessment plan focus on?The second major section of the opportunity assessment plan focuses on the market—its size, trends, characteristics, and growth rate. The third section focuses on the entrepreneur and the management team in terms of their background, education, skills, and experience.
What term describes the practice of paying for goods and directly through another source?In trade, barter (derived from baretor) is a system of exchange in which participants in a transaction directly exchange goods or services for other goods or services without using a medium of exchange, such as money.
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