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What is a Business Plan:
A written document that describes all the steps necessary to open and operate a successful business.
What is in a Business Plan:
- describes what the business will produce, how you will produce it, and who will buy your product/service.
-explains who will run and supply your business.
-States how your business will win over customers from competitors and what your business will do to keep customers
-Provides detailed financial information that shows how your business will succeed in earning a profit
Purpose of a Business Plan:
-A business plan explains the idea behind your business and spells out how your product or service will be produced or sold.
-A business plan sets specific objectives and describes how your business expects to achieve them.
-A business plan describes the backgrounds and experience of the people who will be running the business.
Importance of a Business Plan:
-A business plan makes you think about all aspects of your business.
-A business plan may help you secure financing for your business.
-A business plan helps you communicate your ideas to others.
-A business plan can serve as a tool for managing your business.
Three main Components of a Business Plan:
-the main body
The main body of the business plan will contain the bulk of the information about the business idea. It provides details on how the business will succeed. It should be compiled first.
Five sections of the Main Body:
3. Financial Management
5. Concluding Statement
The introduction section of a business plan contains many important details about the proposed business idea.
Information in the introduction:
- a detailed description of the business and its goals
- The ownership of the business and the legal structure
- The skills and experience you bring to the business
- the advantages you and your business have over your competitors
Something inspired the idea for your business. Describing how you came up with your idea can help lenders investors and others understand what your business is about. your business plan should also outline your short-term medium-term and long-term goals.
Ownership and legal structures
Provide information relevant to your form of business such as who your partners are or how many shareholders you have this section of the business plan is important because each legal form of business has an effect on how the business works and makes profits. You should have a section detailing your form of ownership.
Skills and experience
Of written summary of your experience is in essential parts of your business plan this summary should emphasize all experience you have that relates to the business including paid work experience volunteer experience in any hobbies you had that relates to your proposed business the skills and experience of any managers are professional employees will be hired will also be relevant.
You should list your company is advantages over the competition.
- public image or reputation
The marketing section of your business plan should describe the products and/or services you will offer, the market, the industry and your location.
Products and services
Describe the products or services and explain how they differ from those already on the market highlight any unique feature of your products or services and explain the benefits customers will receive by purchasing from your company.
You will explain who your prospective customers are how large the market is for your product or service and how you plan to enter that market you should also explain how you plan to deal with competition.
You should describe the industry in which you will operate to find this information you'll need to conduct research.
- external factors affecting your business such as height competition or lack of certain suppliers
- Technology trends that may affect the industry
- economic trends of the industry
- growth potential of industry including growth forecasts
Describe the location of your business lenders want to know exactly where your business will be because the location is often a critical factor in it's success
The financial section of your business plan will help determine your financial needs it forces you to look at financial risks and costs and expenses of running your business it consists of three elements.
Three elements of financial management
-Identification of risks -financial statements
-funding request on return on investment.
The operation of your company is critical to its success in this section of your business plan you should explain how the business will be managed on the day-to-day basis and discuss hiring in personnel's procedures you should also include information on the insurance and lease or rental agreements describe the equipment that will be necessary for production of your Products or services and how the products or services will be produced and delivered.
In this section you should summarize the goals and objectives you have for your business you should also emphasize your commitments to the success of the business
Every business plan should begin with a cover letter a title page a table of contents, a statement of purpose and an executive summary these elements help set the tone for the body of your business plan.
A letter that introduces and explains and accompanying documents or set of documents. It should include your name the name of your business and your address and telephone number it should briefly describe your business and its potential for success else I need to tell the reader how much capital you need
Statement of purpose
A brief explanation of why you're asking for a loan and what you plan to do with the money
Short restatements of the report it's your capture the interest of its readers a make them want to read more.
- describe your business concept and communicate what is unique about your idea
- include your projections for sales cost and profit
- identify your needs
- stated amount you are interested in borrowing
It should be written after the business plan has been completed
The appendix to the business plan include supporting documents that provide additional information and back up statements made in the body of the report.
- tax returns of the business owner for the past three years
- personal financial statement of the owner
- copy of proposed lease or purchase agreement for the building space
- copy of business license and other legal document
- copy of resume of the owner
- letters of recommendation
- copies of letters of intent from suppliers
- copies of any large sales contracts you're ready have negotiated
Choose an existing business
Before making the decision to purchase an existing business in entrepreneur must determine why the business is for sale business owner sell their businesses for a variety of reasons bees can include insufficient sales are profits worry about new competition fear of new economic conditions retirement disputes between partners a death or illness of a partner in the owner's desire to do something different.
A person who sells businesses for a living
Advantages of buying an existing business
-The existing business already has customers suppliers and
- The seller of the business may train the new owner
- there are prior records of revenues expenses and profits
- Financial arrangements can be easier
Disadvantages of buying an existing business
- many businesses are for sale because they're not making a profit
- serious problems may be inherited
- Capital is required
Steps in purchasing a business
1. Write specific objectives about the kind of business you want to buy and identify businesses for sale that meet your objectives
2. Meet with Business sellers or brokers to Investigate specific opportunities
3. Visit during business hours to observe the company in action
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