Finance companies and banks demand a written business plan before putting up financial support to a new business. All medium and large companies inevitably prepare a financial budget for the coming year. That should tell everyone that not producing a written business plan is the first mistake everyone starting a new business might make.

Starting a new business without a proper business plan is akin to taking a blind walk in the dark without no road or map to follow. It should not come as a surprise to learn that the majority of new start ups consequently fail within the first two years dashing the hopes and dreams of many budding entrepreneurs.

The benefits to an entrepreneur in producing a detailed comprehensive business plan when some-one is considering starting a new business lie strongly in the thought process that goes into producing that plan rather than the ultimate plan itself. New start ups should regard a business plan as a road map to get the show on the road.

A properly thought out and written business plan for a small business should contain the details of how it is going to get started. A typical plan might include a short synopsis of the new business with sections on sales and marketing, operations or production, purchasing, personnel plus a financial section evaluating those plans and putting real numbers on the written text.

The short synopsis should briefly describe the main business and mention each of the main ingredients contained within the plan to attain the objectives. The rest of the business plan should support that synopsis and should be factual rather than a sales document.

Sales and marketing should include an analysis of the potential and forecast sales, competition and how the sales will be achieved. Identify the sales channels that will produce the sales and why they will produce the sales. The sales section should specifically state the volume of sales of each product over at least the first year and the price at which each of those products will be sold and note the sensitivity of all items to unexpected events.

The operations and production section is dependent upon the type of business and will be variable depending on whether the new start up business was providing services, retailing or manufacturing. The production section is basically a detailed picture of the vehicle that will be used to generate the products to be sold.

Purchasing would include an analysis of how the products to be sold would be sourced. Volumes should be stated and sources of supply specifically identified with a real purchase cost of all major items specified not guessed.

Personnel would include the names of the people involved with brief details of their knowledge, qualifications and previous experience. The personnel section would also include details of people yet to be recruited if the work to be performed is going to be critical to the new business.

The financial section of a business plan should contained a forecast profit and loss account preferably each month for the first year at least with perhaps a summary of the second year. In addition to the profit and loss account a cash flow statement taking into account capital introduced and stock levels should also be produced.

The sales and production or purchasing numbers including volume and prices contained within the report should be reflected in the financial report. Each major critical assumption within the plan should be subjected to a financial sensitivity analysis that takes into account all potential risks to volume and price levels.

The process of preparing a detailed comprehensive business plan that has been properly researched has significant benefits in itself. If the business has been researched and thought through before the new business starts there is a much higher can it will succeed and suffer fewer negative surprises once the real work of generating sales and profit begins.

A business plan example is without a doubt the best way to present your dream to “the god of purse strings” AKA your financiers. Your plan needs to be professionally presented so anyone who’s involved can easily read it and clearly understand what it’s all about.

It Can Open Doors!

A well written plan can open the doors that many cannot get through. It can get you places that you would otherwise not get to. Like face to face with prospective venture partners, alliance partners and banks.Your business plan needs to spell out loud & clear to those who are financing you that you have the goods to make it work. Throughout the life of your business, your plan will be your road map to success.

Do I Really Need a Business Plan Example to Make It?

Short answer… NO!

Lots of business people started their business without one and have succeeded. That said, If you have a truck load of cash to start off, you can make it too without a plan. But if you don’t, it’s a much smoother road if you have one. Especially if you’re chasing finance, for this scenario you’ll need to present a full blown plan.

However, if you happen to own a successful business, your financiers may not even require you to have a plan but it will always increase your credibility & viability.

8 Reasons for Writing a Business Plan -

1. To increase the credibility of a finance application

2. To help raise equity funding

3. To define your objectives and strategies behind them

4. To allow regular reviews to identify change

5. Identify possible joint ventures

6. Facilitate & record partner agreements

7. Record the business value for sale or legal requirements

8. Evaluate new opportunities and/or products

Aah, Brain Lock!!

We’ve all had it some time or another… sitting, staring, the screen saver the only thing stopping us from dropping off. Racking your brains trying to come up with a business plan example can be just plain frustrating.

Here are some options you might like to think about -

What About Software?

With a clever software package assisting you, commencing with some business plan examples beats staring at a screensaver hands down.

Software… the great brain lock remover.

Good software should provide prompts for the primary concepts and present you with the framework to kick off and, there are many good books available to assist you in creating a good business plan.

Hire an Expert.

You can contract an expert to help develop your plan but that will more than likely cost more than some good software and… you’ll still have to provide the primary theme and ideas. Plus, you’ll need to monitor the work so the end result is a workable, logical business plan example that you and your supporters can follow.

This one mistake is so critical that it jeopardizes the immediate survivability of your start up company – even before you get started.

What is the second biggest mistake?

Many cost-sensitive entrepreneurs depend on number crunchers, bean counters and newly minted MBAs for their projections – just to save a few dollars.

New start up CEOs doom their new company by pinching pennies in the wrong place. Instead, what they need are pivotal insights from experienced consultants who can provide the guidance the entrepreneur needs for producing a realistic, genuinely implementable business plan.

Your business plan is not some academic document – instead, it is your crucial road map to successful implementation of your vision for your new company.

The most important part of any business plan is the detailed financial projections that are the basis for the entire business model of every new start up company. There are four sets of underlying assumptions that drive all the projections:

Start up costs – what will you need to spend up front to get the company going? Sales forecast – the single most important set of assumptions for your whole plan – how many of what, will you sell, for how much, at what costs, when? Personnel – how many, of what kind of employees, will you need at what cost, when? Operating costs – what will it really cost to be in business, generate sales, give necessary sales support and exemplary customer service and cover all back office expenses?

Every part of your financial projections is just arithmetic – based on those four sets of driving assumptions. Because it is just arithmetic, many entrepreneurs make the often fatal mistake of assuming it is trivial and can be done easily and cheaply.

But – if you guess wrong on any of these assumptions, then most of your projections are wrong – including two of your most important projections: your cash flow and your capital needs. If you guess wrong on your assumptions that impact these, then you will probably run out of money and your new company will fail.

Number crunchers and bean counters are great at arithmetic. So are newly minted MBAs. And, they can be relatively cheap to hire. But this cheap hire may be the most expensive mistake you will make as a start up CEO.

These cheap hires almost never have any experience base or expertises that help entrepreneurs make meaningful assumptions. So, entrepreneurs who use this approach for their business plans end up with GIGO: garbage in, garbage out projections that are misleading at best – but more often, fatal in the end.

As the adage goes, the only thing worse than going the wrong direction – is going the wrong direction enthusiastically. By basing your business plan on the wrong assumptions, you end up going the wrong direction – probably enthusiastically – believing your bean counter-generated plan will be the path to wealth.

Entrepreneurs who have thought they were saving a few hundred dollars by hiring cheap number crunchers or inexperienced MBAs, end up losing everything they’ve invested in their new company – all because they were penny wise – and dollar foolish – or rather, thousands, hundreds of thousands or millions of dollars foolish.

Cash is always limited for start up companies – but this is one place you do not want to get trapped by false savings.

What’s the best way for you to avoid the second biggest mistake for your new start up company?

Hire an experienced management consultant who specializes in start up companies – particularly a consultant who has started at least a dozen of their own companies. That way, you get insights based on real life experience that will help you end up with a genuinely implementable plan for the future – your future and the future of your new start up company.

Writing a business plan will be paramount for any business. It will be the very lifeline and guide towards a bright future. For this reason, writing a stellar plan that is sound is critical.

Here are top tips to employ while going this direction. Some pitfalls will help people steer clear of potential downfalls common to those who fail to plan.

Establish the road map

This is the first thing to do when writing a business plan. It will involve planning for the direction to follow which encompasses the mission statement that is vital. A business must follow a direction that represents its values and purpose for existence hence this is the first thing to state in the business plan.

Customers first

In the process of planning a business, people may forget that the consumers or customers are the most important factor. For this reason, take time to really know the kind of products the customers want. This will be the foundation in which the business will be formed on.

Master competitors

A good business plan is one that considers other players in the market. The competition is likely to be cut-throat in many sectors and learning from veterans will be the way forward. The plan should figure out how to stay above the water and beat the competition to achieve set short and long term goals.

Undertaking risks

There are always risks to be taken in business and a plan should reflect this. Business must be ready to take calculated risks that need to be covered by a good plan. Reckless risks will only work to the detriment of the business Therefore, cover manageable risks and this will be the way forward to greater achievements.

Customize your plan

Many times, businesses will be tempted to adapt existing or common business models. However, since all businesses are unique this might not be the most effective way to go about it. Therefore, learn from the best but tailor your business plan to the needs of the same. Be ready to think far and wide accommodating all the needs and demands of the venture.