Just as you need a blueprint to build a home, it’s a wise entrepreneur who uses a blueprint to build their business. In business – your blueprint is your business plan. And your business plan will help guide you in creating, maintaining and growing your business. Most importantly, you will want to have a business plan if you intend to work with a commercial lender for financial advice and the multiple loans you may need throughout the life of your business.
Having a well thought out blueprint or business plan will give you greater peace of mind whether you are starting or growing a business. In addition, your business plan will give your commercial lender an overview of your company, where you are currently in your business, and what you are planning. If you are thinking of writing your first business plan or updating your current plan, here are some critical areas to cover and promote your financial wellbeing.
EXECUTIVE SUMMARY
Start with a concise description of your business. In this summary you can include your mission and vision, the concept of your business, the products and services you plan to offer, your marketing segments and channels, an estimate of market potential. Also include your management team and or advisors, and a financial overview including the capital you will need to start and or grow. You can also briefly mention in this summary any other critical information such as key issues and risks.
BUSINESS DESCRIPTION
Next create a detailed description of the business you are planning or currently operating. Offer a brief company history if available. Describe your short-term and long-range goals, including any milestones. Prepare a detailed description of your products, services and how you are marketing them. Include a detailed description of your market and how your customers will benefit. Describe any distinct or unique features of your business and growth expectations. Finally, define what you think are your critical success factors.
MARKETING PLAN
To create your marketing plan your will want to do a complete market study. This is something you can do yourself or you can hire a firm to do this for you. You will want your market study to include a description of your specific business and industry environment including a potential outlook on both. Determine your competition and prepare a competition analysis. Likewise, you’ll want a target market profile to define who your potential customers are and why they will decide to buy or not buy from your business. Discuss your pricing structure and policies, your market strategy and your sales strategy along with your promotional plans.
SALES PLAN
In your sales plan you will want to address your market size and the factors that will affect your sales volume. Include a selling cycle and sales forecast for your business. Address how you plan to sell your products and services and what channels of distribution you will use – traditional as well as digital – in today’s marketplace.
MANAGEMENT AND ORGANIZATION
Again, whether you are creating your business or looking to expand, it’s important to identify the key management personnel you have or are planning to hire. When just starting your business, it may be that you are the only employee. Therefore, whether you are the only employee, planning to hire management personnel or you already have a management team, you’ll want to make sure to list your qualifications as well as the others you plan to bring onboard or are already working for you. Next you will want to address your organizational structure and your compensation plan. Include how employees are selected, trained and if you will use any outside professionals.
OPERATIONS PLAN
This is the area in your plan to describe what, where, when and how of your business. You will want to provide your geographic location, your facilities, equipment and layout. Include anything else you think is important to your operation. For example, will you do everything in-house or will subcontract some of your work? Also discuss your current capacity and your future needs. Identify your current or potential suppliers. Again, who is doing what, where, how and when in your operation.
LEGAL AND ADMINISTRATIVE
With any business, you will want to consider an accountant and an attorney to help you get started as well as help you maintain your records and prepare your taxes. Oftentimes your accountant can refer you to an attorney to help you set up your business and prepare any legal forms, contracts, and policies. Depending on the type of business you set up, an attorney can also help with your board of directors, minutes required and or a board of advisors. Finally, your attorney can help with insurance considerations and any other legal questions you may have during your startup and as you grow.
FINANCIAL PLAN
Now the most important part of your business plan – your financial summary. You will want to be very clear about the major assumptions you are making to show the feasibility and profitability of your business. In this financial plan you will also want to include three-year projections of your cash flow, income and expenses. Consider providing your first year as monthly cash flow, income and expenses, your second year as quarterly cash flow, income and expenses and your third year annually. Provide a balance sheet, break-even analysis (consider both fixed and variable costs), source and use of funds (both debt and equity), a budget and any accounting controls. You want to elaborate on your benchmarks, risk analysis and short-term milestones and long-term goals.
A blueprint is a guide for making something happen successfully. You may choose to include all this information and more…or you may choose to create a plan with less detail. Your commercial lender is a great resource for reviewing your business plan. They can discuss next steps, determine if more information is needed, and equally important – offer you advice for growth and expansion.
To meet with a local commercial lender, feel free to visit KCSB. You can call 269.679.5291 or visit a branch office to set up an appointment to meet with a business banker today. See https://kcsbank.com/locations to find a location most convenient for you. You can also learn more about KCSB’s business services and loans, see Your Guide to Business Banking.
Kalamazoo County State Bank is an Equal Housing Lender and Member FDIC.