Tips on Completing a Successful Business Credit Application

In order to establish your credit and keep your business attractive to lenders, you’ve got to make sure you build yourself a rock-solid credit application. There are few things to keep in mind when filing an application, so keep your head up and your spirits high.Business Plan: You’ve got to get any lender you’re considering stoked to invest in your company. The perfect plan will include a title page, company description, market analysis, products and services, operations, marketing plan, ownership, management and personnel, funds required to start your company, financial statements and projections, and any necessary appendices. The best plans are going to be able to explain in detail why the business is worth investment and what you can guarantee as its CEO.

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Financial Analysis and Projections: Any bank or personal investor lending you money is going to need to know what kind of finances you’ve already invested in the company and what kind of evidence you can provide to ensure your business’ financial success. You’ll need to provide your lender with a personal financial statement, a balance sheet, a profit and loss statement, and a statement of your business’ cash flow. You’ll also have to know exactly what kind of market you’re dealing with. Yearly projections take research and an understanding of your business’ industry patterns to make an accurate assessment of where your business will be as it continues to function.What the Lender will Review: Just as you know you like a song within the first 15 seconds, a lender is going to know if they want to give you money based on five specific factors: your ability to repay them, the capital you’ve invested in your company, the collateral you’re willing to put up, the reasons why you need the loan, and the overall appeal of the company and the borrower.

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When completing your application, keep in mind your business plan is only a written projection of your needs; what gets an investor interested is your business’ market appeal and your ability to sell it.

Business Plan Financial Projections: Stop Worrying About Being Right…

Business plan financial projections seem daunting because
they are so uncertain. This very uncertainty, however, is
what makes preparing them easy because you can’t possibly be
right. You can’t predict the future. None of us can. All you
can be is competent in the way you prepare your business plan
projections.Before you finalize your business plan this year, consider
these six caveats to preparing your business plan financial
projections:1. Don’t offer pull-out-of-the-air, “conservative”
guesstimates about getting some percentage of the overall
market demand or year-over-year growth.It is a mistake to assume that business investors will
appreciate your being conservative with your business plan
financial projections in the early years of your business.
Don’t think for a Wall Street minute that presenting
“conservative” business plan financial projections indicates
“realism” to prospective business investors. Business investors
invest for one reason: to earn a return on their money. How
long the money is invested influences the amount of the return
earned. Let’s say a business investor wants to triple an
investment. Well, if that investment triples in 3 years, the
return is 44%. If it triples in five years, the return is
25%. Adding just two years to the investment period nearly
halves the return! Now do you see why time is so important
to a business investor? Here are a few other examples: let’s
say a business investor wants to:Make 5 times an investment in 3 years = 71% returnMake 5 times an investment in 5 years = 38% returnMake 7 times an investment in 3 years = 91% returnMake 7 times an investment in 5 years = 48% returnMake 10 times an investment in 3 years = 115% returnMake 10 times an investment in 5 years = 59% returnSo, while you may find it attractive to figure out how to
make “just a living” until the business venture proves
itself, you now understand why business investors want sales
and earnings to grow absolutely as fast as possible, without
being deceived, in your business plan financial projections.
On the whole, business investors are risk averse only to the
extent that they don’t want to lose their money or tie it up
in a low return investment. Typically when you make the claim
that your business plan financial projections are “conservative”,
it usually just means that you have no idea how and why you’ll
achieve a certain level of sales within a certain time frame.
Interesting, these kinds of estimates, provided that you’ve
done some good thinking about market segments and overall
demand, often turn out to be too low. Remember, it’s just as
bad to underestimate your sales, as it is to overestimate
them.2. Avoid calculating costs as a straight percentage of
revenues.Sure it’s easier to do things this way, especially with
Excel and other business plan financial projection software.
Costs are real, however. You need to know what they are very
specifically. If you’ve done your homework in developing
your business plan, then you should already have this information,
or at least the basis of it. Just estimate and calculate your
costs on a product-by-product basis.With these warnings in mind, use the following steps to
develop your business plan financial projections:Think about what percentage of the overall market share your
competitors already own. Assume that they will continue
their present trends in growth. (Note: some competitors may
already be trending down and losing market share.) Temper
your market share estimates with some discussion of how your
entry into the market will affect these trends. Then,
estimate the percent of total, potential demand that remains
available to you.

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Now, based on the limitations of your operations plans,
calculate how much of this remaining available demand you
can achieve. This is a very simple calculation. Start with
your overall productive unit capacity and factor it by the
expected yield of sellable product, then multiply these unit
sales by their respective selling prices and voila, you have
the revenue numbers for your business plan financial projections.Let’s take an example.Your research indicates that 2 out of every 10 females age
23 to 55 will under go some type of non-invasive cosmetic
treatment in your area. Your research also shows that this
number is expected to grow 20% each year over the next 5
years. There are 40,000 females in your target market. You
identified four competitors in your target market. These
four competitors currently handle on average 6 procedures a
day. You plan to start a non-invasive cosmetic treatment
center that uses the most advanced technology and is thus
capable of performing an average of 7 procedures a day.
Using this data you calculate the following statistics
about your market and market potential:Total market 40,000 females x 20% = 8,000 procedures per
year4 competitors x 6 procedures x 250 days = 6,000 procedures
per yearAvailable procedures: 8,000 less 6,000 = 2,000 per yearYour productive capacity: 7 procedures a day x 250 days =
1,750 or 21.875% of the total market. The average selling
price for a procedure is $400. Thus, the revenue for the first
year in your business plan financial projection would be 1,750
procedures times $400 or $700,000.Now, let’s say you’re were projecting 2,200 procedures per
year. This would mean that you would have to alter your
operating plan to be able to perform 2,200 procedures. You
would also have to demonstrate how you would capture an
additional 200 procedures from your competitors.
Granted this is an over simplified example, but it should
give you a feel for how this process works.Regarding price, in most cases you should have a clear idea
of how to price your product or service. There are usually
other, similar products or services out on the market.
Unless your competitive advantage is a cost reduction and/or
unless price is a critical basis of competition, just
estimate the value of your improvement and add it on to the
average price currently offered in the marketplace. In order
to make this estimate, you’ll have to be talking to
potential users. Find out what they pay now. Find out how
they feel about the current price. Ask them if they’d be
willing to pay more and how much more. If you ask enough
people, you’ll get a general idea.3. Never determine price on the basis of a margin you think
is attractive.The market will pay you only for the value you deliver,
which is determined by the consumer paying the final price.
It’s easy to make the mistake of thinking that a 20%, 40% or
even a 60% margin is great. Never considering that if the
product or service you’re offering provides a real
advantage. If you do this, you may be grossly
underestimating the price you can get in the marketplace and
underestimating your business plan financial projections.
Consumers don’t think in terms of margins. They could care
less about what you ought, “reasonably”, to get for your
product. That’s why you must find out the most that they’ll
pay. This is the value of your product or service. Come up
with some reasonable basis for determining this real value.
Keep in mind the obvious: If the consumer’s value on the
final product or service is less than your cost plus a
reasonable profit to keep your business growing, you’re in
trouble. Your business model will not be sustainable and your
business plan financial projections useless.Now calculate the costs of manufacturing and distributing
your product. These costs flow directly from your revenues
estimates and operations plan. How much will it cost to
purchase what equipment and materials, hire what personnel,
engage in what selling efforts, pay what accountants and
lawyers, rent what kind of space and so forth, to achieve
the revenues you’re showing in your business plan financial
projections. You must be very specific. Project your costs
over time. Keep them tied to the units you need to sell to
achieve the revenues in your business plan financial
projections.Obviously, costs and revenues work hand in hand.4. Keep your fixed cost low.Keep in mind that none of these revenues and the cost
estimates are going to be perfectly accurate, which means
the amount of profit or cash available to pay “fixed” cost
isn’t going to be accurate either. As a result, you can lose
your shirt trying to pay for equipment, a receptionist, or
other activities that don’t contribute to the sole objective
of making sales. Wherever possible, rent space, rent time on
equipment, answer your own phones, etc. To the extent that
you keep costs variable in your business plan financial
projections, you can cut back when sales are slower than
expected. It’s the worst situation to have a big,
well-furnished office with an expensive secretary who
needs the job, when the money isn’t coming in. High fixed
costs in your business plan financial projections also send
the wrong message to investors that you know more about the
“form” of doing business than about actually making money.Now pull all your numbers together to prepare the financial
statements that summarize your business plan financial
projections. You need three basic statements: cash flow
analysis, income statements, and balance sheets. All of
these come directly from the above calculations. Your cash
flow analysis indicates when and what amounts of capital
infusion you’ll need to start and sustain your business plan.
Make your income and balance sheet projections on the
assumption that you’ll get the capital. For the first year
or two of your business plan financial projections, present
each of these statements on at least a quarterly basis.
Monthly is best. I suggest doing a 24- or 36-month projection
depending on your growth plans and changes in the industry that
you foresee. Follow these monthly or quarterly projections with
annual projections till you cover a span of 5 years.Finally, run through some “what-if” scenarios or sensitivity
analysis. Though you business plan financial projections should
be based on your best, and best-supported estimates of costs
and revenues, you know you can’t be 100% right. That’s why it’s
important to identify those elements or assumptions of your
business plan financial projections that you feel are most
uncertain. Write out the nature of the uncertainty and the range
you think the estimates will fluctuate up or down. Then change
the estimates accordingly and re-run all your statements.
Pay close attention to how your business plan financial
projections, especially cash flows, change when you change
each assumption. This will help you determine how much
“cushion” you have available and, if business isn’t going
according to plan, at what point cash will become an issue.

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5. Do not simply assume that costs and revenues may be
“off”, up or down, by some percentage.Again, I know that Excel makes it easy to do this. For all
the same reasoning as above, stay focused on the assumptions
and details that make up your business plan financial projections.
It’s the details you need to examine for their sensitivity and
their impact on the bottom line. You only need to alter those
specific items that you’re most uncertain about. If it’s revenues
that you’re worried about, is it the price, the volume, or
both that concerns you most? How big a swing in the estimate
are you worried about, in what direction and why? If it’s
your cost projections that are keeping you awake at night,
which cost elements and why? Things like rents and labor
costs can be determined fairly accurately. But maybe you’re
unsure about materials or labor availability or how
efficiently you can produce your products or provide your
services. Maybe you’ll have to pay extra to ensure their
availability. This kind of thinking forms the basis for running
“what-if” or sensitivity analysis on your business plan financial
projections.6.Do not include every possible business
plan financial projection scenario in your business plan.Both you and your investors need to know what aspects of the
business plan financial projections are most uncertain,
represent the most risk, in what direction, why, and how
they affect the bottom line. Having hundreds of alternative
scenarios to sort through is like a man with two watches
showing two different times… he never knows what time it is.
Lots of alternative business plan financial projections also
indicate that you’re not too sure about anything. This is an
impossible way to communicate with business investors, manage
your business, or make important decisions. It’s much more
effective to identify the risky areas of your plan, tell why
and how they impact the bottom line and what actions you
plan to take if they occur. This helps you and your business
investors stay focused on the high impact areas and to think
clearly about whether other factors should be considered as
well. It also lends more credibility to your talents and
increases the likelihood of your plan’s success.Finish this discussion with a summary of the critical
aspects of your plan and related contingency plans. If
you’ve followed all these steps, then you can figure out
what you’ll do if your actual performance turns out to be
different than your business plan financial projections.
Remember, you’re purpose is to demonstrate to business investors
that you’re competent; worrying about protecting their investment
and running a business, not just flying by the seat of your pants.

Bootstrap Business Financial Plan – Starting a Small Business With Bootstrap Financing

Preparing a sound, bootstrap business financial plan is the absolute key ingredient for any budding entrepreneur starting a small business with bootstrap financing. Unlike a traditional business plan, a financial plan for a bootstrapped business contains six essential components. Components of a Successful Bootstrap Finance Plan1. Expense Summary
The expense summary contains the start-up costs and ongoing operating expenses needed to get your business up and running. 
 
2. Projected Profit & Loss Summary
Your profit and loss summary is a key tool for determining how long it will take your business to become profitable. It reflects a very simple formula of: revenues minus expenses, equals profit or loss.
 
3. Sales Forecast Summary
Your sales forecast summary is an estimation of what you believe your sales are likely to be each month. Sales forecasting requires research and a solid knowledge of your industry, niche market and product or service.

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Starting a small business with bootstrap financing requires laser targeted forecasting. This is not as difficult as it sounds, it just means you must really invest the time in thoroughly researching your business.
 
4. Reserve Funding Plan
Establishing a reserve funding plan is essential for weathering the “start-up storms”. This is a back up funding plan for keeping your cash flows above dangerous levels.  Your bootstrap business financial plan must include a reserve funding plan, in order for your new venture to be successful.
 
5. Cash Flow Management Plan
This is simply the anticipated inflow (sales) and outflow (expenses) of cash through your business by month. Why it’s so tricky is due to the fact that you may have slow sales or no sales when you’re just getting started. Or, perhaps your customers are not paying within terms. Even if you have great sales on paper, your cash flow management plan will determine your success to a large degree.
 
6. Balance Sheet
A balance sheet provides a good overall picture of what your business is actually worth. It takes your assets (physical goods like equipment or property) minus your liabilities (debts owed to creditors) and gives you the equity value of your business.
 
What makes these components different from what you would prepare for a business plan written for bank financing? Well, the main difference is that this plan is just for you. It is an actual plan that you must follow to achieve success in your business. I have seen far too many instances where a traditional business plan is almost completely ignored, once the bank loan check is cashed. 
 
With over one third of brand new businesses failing in their first year of operation, you owe it to yourself to minimize your start up risk, by being well prepared with a sound financial plan.
 
Where Does a Bootstrapped Business Plan Fit In?
 

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Where does a bootstrap business financial plan fit in?  Well, first you must understand bootstrap financing. Starting a small business without borrowing is the ultimate goal of a bootstrapped business’ financing strategy. Many new entrepreneurs just don’t realize that you can start up a business, even if you have very little money, poor credit or don’t own a home. How is this possible? I know that I’m going against conventional wisdom here, but you really can start up a brand new business without BIG bank loans or a stockpile of cash.
 
Find the free sources of business start up funding your new business needs to survive and thrive. Start by claiming your free copy of The Bootstrapper’s Business Start-up Planner, by visiting my website.
 
©2009 Kimberly Kelly – All Rights Reserved Worldwide.
 
Permission to reprint this article is granted strictly on the condition that it be reprinted in its entirety, with all live links and author bio in tact.

5 Keys to a Successful Business

Business owners are some of the most optimistic, and often the craziest people in the world. No-one starts a business believing that it will fail. We are all absolutely convinced that our idea is a great one, that we will be successful (where others have failed) and that this business will change our lives for the better. If we did not feel that way, we would never take the risk to invest our own money, or borrow from others to start our business. The reality is however, that, according to the SBA, most businesses eventually fail and more that 50% do not survive beyond the first 3 years. Even if you manage to get that far, things can still go horribly wrong, as many seasoned business owners found out during the recession which hit us during 2009 to 2012.So, does this mean that you should not start a business at all? Absolutely not. I believe that your business can be an outstanding success, if you approach it in the right way, avoid repeating previous mistakes and impose discipline on yourself as the owner. Here are some of my suggestions on how you can make sure that your business succeeds:Discipline:Lets start with you. Successful business owners are disciplined people and more often than not, businesses fail because their owners fail. Your business must compete to succeed. There is always someone out there, trying to win over as many of the customers that you are targeting. Business is competitive and if you do not intend to work hard and discipline yourself, then don’t get into the arena. Anywhere there is competition, there must be discipline. You could have the most unique skill, or the best product idea, but your business will never achieve its full potential, if you do not have discipline.Discipline is a determination to work hard to get it right. It is not settling for mediocre results but rather working until you achieve the qualities and results that you need to compete. No-one will buy your product if it is substandard, or hire your services if you cannot deliver what you promise. Business discipline requires an eye for detail. I learned a valuable lesson very early on in my career. I was once required to do a financial presentation to a senior executive and felt that since I knew this stuff, I could get by with a minimum amount of research and preparation. I went to the meeting and had my presentation ripped to shreds. I was unable to answer questions that were obvious and fell way short on the detail needed to be credible and convincing. I left that meeting upset and angry, not with the executive, but with myself and vowed that this will never happen to me again. As a business owner you will not get things right every time. You will make mistakes and mess-up on occasion. But if your product or service fails, let it not be for lack of effort and discipline on your part, or that you were too lazy to do it right.Due Diligence:”A fool and his money are soon parted” – Dr. John Bridges
“All that glitters is not gold” – William Shakespeare
“There is a sucker born every minute” P.T. Barnum.These old sayings are trying to warn us that not everything we think is an opportunity or a good business idea, is likely to succeed. There are many con-artists out there, whose sole purpose in life is to deceive you into making financial commitments and who have no problem in robbing you blind. It is therefore foolish on your part not to do proper due diligence on any business idea, franchise or entity you intend to buy or invest in. This is where many business failures occur. At the very beginning.

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Due diligence is a serious matter for start-ups as well as on-going businesses. Large successful businesses are constantly doing “due diligence” on their internal processes (systems review, business process improvement, financial and strategic planning) as well as on any expansion thrust or acquisition they may contemplate. Start-ups need to do this as well, before they invest significant funds. Be wary of taking advice from people with vested interests in your decision. For example, you may be considering investing in a franchise. Don’t rely solely on the advice of the franchise vendor with its polished website and a persuasive story, to tell you what a great opportunity this is and how much money you will make. Get independent advice and do your homework before you invest.Many people start businesses based on a personal passion. While this a great plus factor for success, because your passion drives you to overcome obstacles, it does carry the risk of making business decisions with your heart rather than your head. Sometimes we are too close to the project to be objective and we become emotionally committed too early. This is where an independent expert like an experienced business coach or adviser comes in handy. Some would-be business owners need to hear the brutal truth (in a compassionate way), before they go on to make the mistake of their lives. “Faithful are the wounds of a friend” (Proverbs 27:6). Finally, don’t be taken in by those who pressure you into investing in “a once in a lifetime, limited space available” opportunity. Anytime someone says that to me, I take a step back, and take a good hard look, to see what I’m missing about the offer. It is better to miss out on a “limited offer” opportunity than to rush in and lose your money.Marketing:A well thought out and researched marketing plan is one of the most important ingredients that you need to succeed as a business owner. Unless you happen to own the only source of water in the desert, don’t expect people to automatically think of you and come flocking to your doors to buy your product. I worked in a corporate career as a CFO for many years before going off on my own. One of the biggest challenges that I faced when I decided to start my own consultancy business, was how to market my services. That is because, for many years, my job was about cleaning and cooking the fish that someone else caught. All of the businesses I worked for, had large, well staffed marketing departments, whose jobs it was to go out there and win customers. My job was to manage the money and make business decisions. That works fine if you are a part of a large well structured business. If however, you are the owner of a small business, marketing is not a secondary pursuit to be left to others, it is your primary point of focus. You may have a brilliant product or service to offer, but if you do not have a winning marketing plan, no-one will know about your business or care about what you sell. So, whether you are a small or large business owner, you must get involved and often drive the marketing function. You need to know the following:What specific need does my product or service meet?
Who are my customers, what do they want and how much are they willing to pay for it?
How sustainable is the demand for my product or service?
What is it about my product/service that makes it unique? How can I take advantage of this?
Who are my competitors and what are they able to do better than me?
How do I reach out to potential customers to persuade them to buy my product /service?
How much money do I have available to promote my business?
What specific marketing/promotion activities will work best for me?Answering these and other marketing questions would help you understand your product/service customer appeal and market potential and how it ranks against your competitors’ offerings. This forms the basis of your marketing strategy and business plan and is critical to your long term success.Capital:Raising sufficient capital to start and develop the business is very often the biggest challenge that entrepreneurs face. I have seen many, potentially successful businesses, grind to a halt because the owners did not have capital to take it from start-up, to sustainability. A business needs capital to acquire productive assets and fund its operations until the business itself can generate enough positive cash flow to continue as a going concern. Say as an example, you decide to start a restaurant. You would need capital to buy cooking equipment, furniture, renovate the premises to suit your needs, buy inventory, secure licenses and so on. This is what many people understand capital to be used for, the initial investment to start or acquire the business.However it may take a while for your restaurant to become popular and attract enough clients to provide the revenue to fully fund operating costs. In the mean time you have overheads to pay such as monthly rent, wages to employees, advertizing costs, replenish inventory (drinks you sell and food ingredients you serve) and so on. This is where many businesses fail. The owners hope that the sales they generate in the future will cover their operating costs from day one and do not properly estimate the time it would take for the business to become established, during which the owner needs to have additional capital to carry the business.Underestimating the point sustainability or “breakeven point” is a common and fatal mistake made by both seasoned and novice business owners. Before you start your new venture, you have got to realistically project your future cash flows and determine if you have sufficient capital to succeed. Here is what typically happens if you don’t do this. You start your new business by investing your life savings. Things go well for a while, but you soon realize that it is taking longer for the business to become established than you anticipated. Customers are coming in, but not in the numbers you first expected. A lower number of customers means less revenue to pay expenses and you quickly find yourself running out of money to pay suppliers and bills as they fall due. Next comes the juggling act of trying to figure out which suppliers to pay first and which ones you will stretch out far into the future. The calls begin to come in from creditors and you now find yourself working for free for a business that you love, but which is slowly dying, because it ran out of capital before it became sustainable. This is the most common reason for business failure and it supports the SBA statistic that it takes 3 years for a business to fail. That is the time the owner takes to realize the painful truth, that he/she never had sufficient capital to start the business in the first place.

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Faith:These four items, Owner Discipline, Due Diligence, Marketing Strategy and Adequate Funding are the main, universally applicable business ingredients needed to operate a successful business. There is however one more ingredient, which is personal to each business owner, and that is “faith”. I said earlier that business owners are either the most optimistic or the craziest people on earth. That is because we take risks with our capital as an act of faith, hoping for a successful outcome. It takes faith to start a business. But what is faith? It is an expectation that things will work out, or materialize, as we hope or believe. It is what gives substance to our hopes and dreams. The Bible tells us that “Faith is the substance of things hoped for, the evidence of things not seen”. (Hebrews 11:1).As believers in Christ, we have already established a platform of faith in our lives. We believe that an unseen God, who controls the universe, has a plan and a purpose for our individual lives. This plan is made real in us as we place our faith in our Lord Jesus as our personal savior and leader. Now, to everyone else, this is absolutely nuts. But to those of us who have taken this step of faith, it is as real as the air we breathe. Once we get to this point, every additional thing we do that requires faith, is built on this platform. As a result, our decision to start a business, is not based on an abstract optimism that things will somehow work out, but on the trust we establish in our Lord Jesus to lead and guide us.I believe that when we become reconciled to God through faith in Jesus, an eternal destiny opens up to us. We who were all once distant from God, now draw close to Him and get plugged into His purpose for our lives. Our purpose for our businesses also transitions from simply being a source of personal wealth, to a tool that God uses to bless us and to bless others. As we actively cooperate with God as an act of unselfish faith, He leads us into decisions and opens doors for us, that we ourselves could not open, all according to His will and purpose. Being Christian business owners does not guarantee that we will all be rich and “successful”. It does however give our businesses and our lives an added dimension and very often, if we are committed to God’s processes, things work out to our benefit. Our role is to trust God for the unknown, follow His leading, even when this conflicts with our personal agenda and build our businesses on Biblical principles. When we take this approach, we have the assurance “that all things work together for good for those that love the Lord and are called according to His purpose” (Romans 8:28). This hope applies to our all aspects of our lives, including our businesses.I hope this information was useful to you and I encourage you to contact me if you have any questions about your business.Robert.
Website: http://www.christiancfo.com Email:rfullerton@christiancfo.com.

Planning For Results – A Process Tool To Build A Successful Business

Business Plan:Proper Planning is an important and effective tool in financing your project or a business, and shaping its future. It is important to understand how planning process and Business Plan can be applied to your business.”Conversation would be vastly improved by constant use of four simple words: ‘I do not know’ ” – Andre Maurois Planning is an attribute or character of Management that assists and motivates a leader to make things happen, rather than not doing anything or allowing things to happen. Management may be an individual, family, business owner, principal, or project manager that organizes the finances for a project or business.
“At a presentation I gave recently, the audience’s questions were all along the same lines: ‘How do I get in touch with venture capitalists? What percentage of the equity do I have to give them?’ No one asked me how to build a business!”–Arthur Rock, Founder and Chairman of Intel Corporation.Surprisingly, many business owners do not consider a Business Plan as an important factor in building the business and raising money. They consider that they might be better of just sketching out basic financial projections. For a start-up project, it is necessary to prepare a full Business Plan. This includes organizing financial with three years of projections and describing detailed goals and strategy and why the business will be successful. It also helps in creating a good impression with stakeholders and lenders/investors. Once a full Business Plan is prepared (which may initially take three to four weeks), it may be appropriate to spend one or two days every few months updating it. This will also assist in evaluating earlier decisions and improving or fine tuning the business model.A Business Pan is only as good as the quality of efforts that go into the planning process and preparing or documenting the same. In general, a Business Plan is the end result of planning process. Successful planning process involves management in a manner where they take responsibility of the organization’s own actions (or in actions) and final results–with a goal to succeed and willingness to take necessary actions that address risks and avoid failure. Business planning requires one to develop goals and strategy that address all probable eventualities or risks that one’s business could face in the future. It helps to determine the best number of action-steps necessary for the management to reach its business goals, and avoid, minimize or overcome foreseeable hurdles.

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Proper planning is an important and effective tool in building and financing one’s project or business and shaping its future.Business planning consists of two key elements: The Business Planning Process and The Business Plan.The Business Planning Process:The Planning Process is a step-by-step approach that helps to build by “thinking-out” management’s plan on how to achieve goals or desired outcomes. The professional skills of gathering and analyzing information, setting realistic and challenging goals, how to meet competition in market place, and sound decision-making at every step are utilized in this process. Today’s business environment is very competitive and full of uncertainties, so management should pay adequate attention to the Planning Process. This process improves the chances of success for the project as it also minimizes chances of failure.
Management should address a series of relevant questions that help clarify business’ past, present situation, the future a business desires, the means of achieving the future, and the systems of organization, delegation and controls or accountability necessary to track and sustain the progress. The Planning Process may require periodic revisions. Management should decide how often it should be revised or updated depending on the value it derives from effort and expenses incurred. As management proceeds through the planning process, it scans through the possible end results of different courses of actions. During this scanning process, management is forced to confront issues relating to the goals, purpose, vision, mission, core values, strategy, customer perception, and priorities of the business.For example, when developing a Business Plan, management may decide not to invest more than certain amount of capital in the business in order to provide owner(s) adequate resources to pursue family, personal or other investment goals. One must acknowledge that, given the management’s decision, it cannot expect to receive the same business development considerations as someone willing to invest triple the amount of capital. Every business may have different goals that will involve investment of resources and sacrifices (opportunity costs). For example, an opportunity or benefit may be lost or “foregone” for the sake of pursuing an alternate use for the same resources. Organizations may sacrifice business success or developmental opportunity, while someone else may sacrifice alternative investment. The business planning process brings these factors in to the deliberations, and realistically assesses the trade-offs necessary for the management team to finalize the business goals.The Business Plan: The end result of the Planning Process.The Business Plan is the final document that defines management’s perception of the game-plan as of a specific date, and is a final output communicating management’s planning process for the project or business. It is a document that states the core assumptions, goals, and strategies that management has decided to pursue by investing the necessary resources in terms of time, financial resources, and action steps that will be necessary to achieve the goals. The business plan is derived from the management’s deliberations and the series of final decisions of the planning process. The written Business Plan also serves as an important controlling tool for regularly monitoring actual vs. plan on different parameters and the corrective action to be taken so that the overall success is achieved for the business or project. The parameters that are monitored could be time, cost, resources, quality, Return On Investment, employee morale, etc. Facilitating the planning process that generates the Business Plan requires expertise in both the financial and general aspects of management and the business planning process itself. The value of a Business Plan is in the decisions it influences during the Planning Process as well as the monitoring of progress–ultimately, how cash flows in and out of the business’ bank account and achieves the stake holder’s objectives over a period.

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How I utilized Business Planning:A company in California manufactured a range of engineering products with a good technology base. However, for various reasons, the business had become stagnant over last few years in terms of revenue and profitability. I evaluated the business model and management infrastructure, and facilitated restructuring of the business with a focus on achieving growth. This planning process involved producing additional revenue streams, improvement of production processes, replacement of machinery, and relocating the plant. The new Business Plan and Presentation Package made it possible to raise additional business loan of $4 million dollars. This was utilized to triple the revenue over a three-year period and also resulted in increasing the number of employees. The business is now on a progressive track, doing well and is expected to achieve its goals.