Q: What should be in my business plan?
This week’s expert is Renee Hode, director of Central Piedmont Community College’s Institute for Entrepreneurship and Small Business Center. Her comments have been edited for brevity and clarity:
Your business plan is going to tell your story. You have an idea, and now you need to put that idea down on paper.
Focus on an executive summary, which is really going to hone in on what it is that you’re doing. Do you have a product or service? What need is it going to meet in the community? Who is it going to be for? Who’s going to buy it, and why? How are you going to make money from it?
If your business involves a product or an invention, you’re going to write about that product, and how it’s different from others that are out there. If it’s a service, you’re going to speak to what that service is and how you’re going to provide it.
You also need to write this executive summary pretty concisely, since this is the pitch that you’ll use thereafter for your business. Anyone reading your executive summary will be able to get a good understanding of what your business is – your goal, your vision, and your steps to carrying out these goals.
Your next portion of the plan is going to be your marketing. You’re going to do a lot of research to have the market analysis in there. What’s the industry? What’s its size and dollar sales volume. Who’s the target customer?
Most importantly, your business plan must include financials. This is probably the biggest part of the plan, the biggest must-have. And your numbers need to make sense. Financials must include start up and operating costs, cash flow, and forecasts on when your business will be profitable.
If you are presenting this plan to lenders for a loan to start your business, financials are a key factor. All those expenses go into deciding your loan amount. Also, show what you as an owner is investing in the business. Even if you have a beautiful business plan and it reads well, you’re not going to be able to go and ask a banker for 100 percent of the funds you need to start your business. They need you to have some skin in the game, so to speak. If you’re looking for a loan, you at least want to have 30 percent in your own investment before they are going to be able to assist you. You’ve got to share the weight of the burden and the risk.
Your business plan should also include the type of legal structure you’ll have for you business. We offer free business seminars on choosing a legal structure that’s best for your business, with a lawyer going through the different entities, including S-Corporation, LLC, and others.
Also, include details about your team. As a small business owner, it’s always great to have some type of management or advisory team in place that’s helping you. Advisory team members could include people who will work with you, including an accountant and a lawyer. It may be a CPCC counselor who mentors you. You’re looking for individuals you trust, who understand the business or industry, or who have some other level of expertise that complements your skill set.
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