7 Steps to a Finance-Centered Business Plan
While many entrepreneurs can easily get started with a one-page business plan, the simple approach isn't necessarily the right approach for every startup. If you're going to need financing or investors, you'll need to build a finance-centered business plan to address all your potential investors' or lending institution's concerns.
Here are seven simple steps outlining what you'll need for a finance-centered business plan.
1. Executive summary. You're going to need to provide an executive summary of your business plan for investors or lenders to read. Think of this like the "cliff notes" of the whole plan. If you have already created your one-page business plan, the bulk of that document now becomes your executive summary. It should cover the highlights and key summary of all the other areas of the plan you're about to cover.
Make sure that it's brief enough so they can get through it quickly, but also contains enough information that they'll want to keep reading and get the sense that you and your business are a good investment.
2. Business overview. At this stage in your plan you'll want to outline what it is that your business is going to offer and what methods you plan to employ to make sure that it sells. It's a high-level overview of the business's make up that should include the type of business you're in, how and where you plan to sell your product or service (Online? Retail location?) as well as the legal entity type you'll be organizing as.
It can be easy in the executive summary to stray from the high-level overview so make sure you stay on point and keep this very broad. You'll get into the nitty-gritty details later in your plan.
3. Management. If someone is going to invest in your business or lend money to you, they want to know who the leadership team is. Is it just you? What are your personal and professional qualifications for the job? What's the rest of the advisory board or executive team like and how are they qualified?
Spell out the management so investors know your business is in skilled, capable hands.
4. The market. This is a crucial step that so many well-intentioned entrepreneurs skip. They get so excited about their passion for the business they want to create or the product they envision that they forget to sink ample time and resources into doing the market research.
No matter how much you're in love with your idea, if there isn't a market for it, it's not going to sell -- which in turn means your business isn't going to succeed. Find the need for your niche and amply describe your research for the market in this section so your potential investors know the market demand. Be prepared and don't skip this critical step.
5. Sales and marketing strategy. This is the stage of your plan in which you will get to expand on step two's business overview. Now you get to really detail how you plan to sell your product or service, what the marketing strategy is and how you're going to create your specific success plan. Knowing your business and knowing the market thanks to your great market research will inform your decisions to set strategy here.
6. Financials. This step is often the one that presents the greatest challenge for some entrepreneurs. If you've managed to get this far in your business plan you are going to need to see it through and do the financials. The finance-centered business plan comes down in a big way to this step as those about to lend you money or invest in your business are going to want to know that their investment is projected to succeed.
Often, entrepreneurs don't have the skills and background necessary to map out financial projections, so do yourself a favor and partner with a qualified, skilled CPA or business consultant who can help. Not only will that lend extra credibility to your business plan, but it will help you set out the financial future to anticipate your business's success.
7. Complete your SWOT analysis. What's SWOT? It stands for strengths, weaknesses, opportunities and threats. This step is your chance to do your market research for the business and its competitors. It's your opportunity to show that you've put time and analysis into the success of your business idea.
What will be the strength of your product and your management team? What are the weaknesses of your business and areas of vulnerability in your plan? What opportunities in the market are you planning to capitalize on and what threats already exist or might materialize from the competition?
Don't underestimate the threats and weaknesses section of this analysis. You'll want to show you thought of every angle and are prepared with ideas and answers.
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