Most people who go into small business borrow money. Whether it is because you do not have the cash to go into business or whether it is because you are doing so to get the tax benefits. It does not really matter what the reason is, the fact of the matter is that to get a loan you should have a business plan to take to your lender.
You see, a very high percentage of small businesses fail in the first 5 years and mostly it is because of finance either at the beginning or the finance to grow the business as required during that time. If it is not the finance it is more often than not the fact that the owner has no marketing strategy and eventually the business fades into oblivion.
To convince a lender to give you money you need to be able to prove to them that you know what you are doing and what you plan to do in the next 5 years. Gone are the days when you can walk into a bank, like I did 30 years ago and ask for a loan and have the bank manager say with a big smile on his face: "I like the look of you, I will definitely lend you the money."
THE PURPOSE OF A BUSINESS PLAN
The idea of a business plan is to let your lender understand:
- what your proposed business is all about
- how well you understand your proposed business
- that you have analysed the business ownership structure
- that you have talked to your accountant
- that you have a very good budget for setting up the business and also for the ongoing running of the business
- that you have researched your product or products
- that you have had a good look at what your competition is doing in their business
- that you know the legal obligations of the business
- that you have a marketing plan and the funds to pay for it
- your plans for the next 5 years
- most importantly how you plan to pay the money back
I am sure you can see from this list that there is a lot to consider when making up a business plan and you can also see why a lender would want you to have one if you are planning on starting a small business on their money.
Earlier we mentioned a marketing plan, and it is also very important to have one made up and you should take a copy of the marketing plan with you when you approach your lender.
To sum up, before committing yourself to anything in your small business you should have a business plan and a marketing plan already made up and in printed form.
Copyright (c) 2009 Kaye Dennan
How about this? You need a business plan because you are involved in the creation of a business that will employ you and others for, hopefully, a long time.
People make better plans when they go on vacation than they do when they enter the adventure of their own business.
Carry it further, when you go on vacation you want to know where you are going. Unless it is your goal to just roam around, and in that case your vacation may not get you any further than the grocery store and the hardware store. Your business could possibly provide for you for anywhere from 20 to 50 years or more. And in this environment today regarding retirement, this business may provide for you long after you can work.
So why not have a direction? Why not have a game plan? Think about it. What are the short term goals that you want to achieve through this business? Long term? Profit? How much do you want to provide for the people that help to propel your company forward? How big? How much money do you want the company to create? Maybe your goal is to remain small and super profitable. Plan how you are going to do that.
Part of the business plan in the beginning is your vision, your dream. That is great. Did your dream include being your own boss? Did it include free time with your family. The point I am trying to make is that you don't have to be a General Motors or Toyota to have or need a business plan.
This small job, creating a business plan is likely to affect you and a lot of people for a long and profitable life.
Both Kaye Dennan & Patrick Cavanaugh are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Kaye Dennan has sinced written about articles on various topics from Medicine, Family and Family Travel. Kaye Dennan has owned small businesses for over 25 years and has always attended to their marketing, and has attended may marketing courses. For more information on Small Business Marketing go to. Kaye Dennan's top article generates over 27100 views. to your Favourites.
Patrick Cavanaugh has sinced written about articles on various topics from Pearls, Painting and Sales and Negotiation. Patrick Cavanaugh has 30 years+ running a , and helping others improve their business, and raising the standards of painter. Patrick Cavanaugh's top article generates over 9900 views. to your Favourites.