When you are about to start a company you must establish a business plan that will help you get the financing to start it up. The business plan is nothing more than a document that serves to know the viability of the company from the technical and economic point of view.
This document will not only provide you with a broad vision of how to carry out the operations of the company, but it is also used in order to present it to potential investors or to support a loan application. Its writing must be meticulous and well thought out because it will be the best cover letter for your business. It may take several weeks to elaborate, especially due to the time it takes to research and clearly present the ideas.
Additionally, the business plan is a reflection tool. It allows you to anticipate possible obstacles and design strategies to overcome them. It is an opportunity to define the culture and values of your company, establishing from the beginning what type of organization you want to build.
The Smart Guide to Starting a Small Business, designed by the Tennessee government, lays out the basic structure of a traditional business plan.
It is essential to mention that, although there are basic structures, each business plan must be unique, reflecting the uniqueness of each company. It is a living document that should be reviewed and updated regularly as the company grows and the market changes.
What should a business plan contain?
Summary: Although it's the first page of the document, it's the last page you should write. This page should summarize the business offer and its financial projections in a few compelling words. If you need a loan to start your business, it's important that the summary includes the amount you need, what you'll use the loan for, and how you'll repay it.
Introduction: Here you should write all the details of your company, such as description, type of product or service offered, target audience, how it is legally and commercially constituted, business objectives and its location.
Marketing plan: This is the most important aspect of the business plan. It should include market research, identifying your competitors, how they affect you and their strategies, understanding the economic environment in which your company will operate, and outlining favorable projections for that environment.
You should not miss an analysis of the weaknesses and strengths of the company, what will be the competitive advantage and the prices of the products or services that you will sell. You need to define the target audience and what are the expectations they have about your products or services. Add the marketing strategy you will use to promote the products or services, including the what, how, when and where. The marketing plan must be thorough and precise, remember that this is a document that will help you sell your business idea to potential investors or funders.
Team Management: This section should include the names, surnames, email addresses, home addresses, professional experience, and responsibilities of the company members. It is essential to specify who will carry out the organization's key functions in areas such as administration and accounting, management of core operations, and legal matters. The purpose is to demonstrate to funders that the team is sufficiently qualified to perform the activities. A resume for each member should also be included.
Financial projections: In this section, add all documents that support the loan or financing request that the company requires, as well as financial projections for different periods.
Mention the amount of money the company has spent or is willing to spend, along with the funds it has raised, where they came from and how they will be used. One of the common mistakes is to underestimate the costs involved in starting the business and the time it takes to have a constant cash flow, so a good tip is to be realistic with this topic. Remember that a correct projection of the cash flow will reflect the ability of the company to pay bills, payroll and services.
Personal finances: If you will be using the business plan to support a loan application, it is advisable to include the financial statements of the company owners, no matter how small the percentage of ownership of each one is.
Include everything in the business plan
In addition to these essential components, it is advisable to include a detailed supply chain analysis, if applicable to your business. This will allow you to better understand how to source your products or raw materials, and how this may affect your costs and delivery times.
Another aspect that may be relevant is technology. If your business depends on specific technologies or you plan to innovate in this area, it is vital that you reflect this in your plan. Not only does this show that you're on top of the latest trends, but you can also attract investors interested in technology.
Now that you know how a business plan is structured, you can begin developing it. On the Tennessee Department of Treasury website you have several resources that you can download to create it. There they provide an Initial Business Plan model to guide you. This consists of 150 questions that, when answered, will help you write the document.
It is vital to remember that, although these tools are extremely useful, the passion, dedication and knowledge that you bring to the document are irreplaceable. Your business plan should reflect not only the viability of your company, but also your commitment and vision for the future.
You can also download several pre-designed Excel spreadsheets where you only have to enter your data to create a financial projection, a personal financial statement and the projection of a cash flow of 12 months. They are quite useful tools that will give you a notion of what to do.
If you want to know more, we invite you to read Hispanic Entrepreneurs Tennessee and visit our sources.
