You need funding for your new idea or expanding your business. The first thing you learn on the Internet is that you need a business plan. Investors and banks will ask for a detailed business plan before even considering giving you money.
However... needing a business plan usually means that you’re in a transition phase. It's a super exciting time. It's also a very busy time. Your brain is in overdrive trying to keep up with the things you need to do… you devote what little time you have to researching ‘how to write a business plan’, ‘business plan sample’, and perhaps ‘business plan template’… and then… you find out that writing a business plan takes a lot of time.
There are so many questions that need to be answered in order to create a polished business plan. You need to do in-depth research on your industry, competitors, target market and financials.
What are your competitors doing well, and where is there room to capitalize on the market?
Is their price point better or worse than yours?
How will you gain market share? Who is your target customer?
What is the market size for your target customer?
How many products do you need to sell in Year 1 just to break even?
What does your realistic 3 to 5-year forecast look like?
…and on, and on.
The business plan writing process helps you uncover a lot of things that you may not have thought about yet. Download my FREE Business Plan Questions for a full list of questions you need to answer when writing your business plan.
The process will help you uncover a lot of things that you may not have thought about yet. I touched on this just above... writing your business plan is a process. You need to answer a lot of serious questions about your company. Researching and finding those answers brings many new things to light.
An experienced business plan consultant will walk you through the process. A business plan consultant's job is to do all the time-consuming 'heavy lifting', yet also make sure that you understand your business model as well as your completed business plan. This enables you to focus all your energy on your business during the business plan writing process, yet understand every detail of the business plan once it's finished.
An investor is investing in YOU just as much as your business.The ideas in your head (your branding, your processes, etc.) are what make your business unique. If you are serious about getting funding for your new or growing business, you cannot simply buy a business plan template online because...
“You Make Your Business Unique”
I seem to say this a lot to prospective clients… but I really need you to get it, or you'll waste a lot of time and money. You can’t simply buy a business plan. A client of mine decided to buy a ‘business plan’ online before coming to me. Here is a section that I cut and pasted from the ‘business plan’ they bought online. I keep putting ‘business plan’ in quotes here just to be sarcastic… this was not a business plan at all.
With such economic outlook and strong business model, coupled with lifestyle change, the business over collaborative and communication platform are going to be the future in global social arena. In this scenario, a young group of young entrepreneurs have decided to ride over this opportunity. This business plan is prepared to conceptualise the whole idea into a structured document for initiating well-defined business. The business plan is developed to showcase a business opportunity. At the moment, [INSERT BUSINESS NAME] is highly poised to move forward to create big business opportunity with complete visibility in the near to medium term horizon. With the understanding of macro and micro economic environment, the business is to set the mission for its plan which is nothing but a concise version of group’s vision and its philosophy of doing business to create stakeholders value. Once mission is defined, the business plan would set the financial objectives with a clear timeline. The idea is to ensure that business returns are adequate and meets all stakeholders’ expectations in the course of business evolution over time.
Again, this was cut and pasted directly from the ‘business plan’ that my client purchased online before coming to me. The only thing I changed was the [INSERT BUSINESS NAME] in order to really highlight my point.
Disregard the typos and poor grammar…
in 176 words, this ‘Executive Summary’ describes absolutely nothing.
This is boilerplate text (fluff) that allows the 'business plan' seller to simply insert a new business name and send it out the door. There is no mention of the type of business, or even the industry for that matter! They simply changed the business name. AND, they charged for it. AND, the entire ‘business plan’ (16 pages) was equally as vague and fluffy.
Does this get you excited to pull out your checkbook and invest?
I don’t want you to learn the hard way like my client did. Simply don’t buy a business plan online. If you present an investor or bank with a vague, wordy business plan template that you purchased online, they will simply show you to the door.
You have a new business idea, or you want to grow your existing business. Awesome! This is exciting. However, you need funding to launch your idea or expand…
The Internet tells you that you need a business plan to present to investors and banks. TRUE.
First things, first…
Business plans take time. Your business plan needs to be as detailed as possible. Investors and banks need to understand your current status and your vision for the future... but it can't be filled with 'hope to' and 'change the world' statements. Everything has to be backed by solid market research, as well as in-depth descriptions of how you plan to make your company a success. This leads me to my next point.
You are the driving force behind your business. Thus, you should be an integral part of the business plan writing process. Even if you seek help writing your business plan (from someone like me), you are an integral part of the process because you make your business unique. There will be many questions that only you can answer.
Certain questions have to be answered within every business plan. A lot of those answers will come from you.
Answers relating to…
• Your management team
• Ownership structure
• Key features of your products and services
…will have to come from you. These are the straightforward and easy questions to answer, but you hold the answers.
You will also have to answer questions about:
• The pricing model for your products and services
• Your competitive advantages within your target market
• Sales and marketing strategies
A business plan template cannot answers these types of questions for you. These questions need to be answered thoroughly and honestly. Really try to focus on you and your business. What makes your business unique? The whole point of an investor-ready business plan is to convince an investor or bank that you are worth the risk… ‘risk’ meaning 'giving you their money'.
Download my FREE Business Plan Questions for a full list of questions you need to answer when writing your business plan.
Angel investors and Venture Capital firms are hard to get a meeting with. AND, you only get one shot!
Once you have answered all the necessary business plan questions, and written a detailed business plan, take your business plan to a local bank or your local SBA office. Get feedback from them. Pay close attention to what the banks and the SBA are looking for. Make revisions to your business plan based directly on their feedback.
If you have the time, help writing a business plan can come from many sources.
Not everyone is a writer. You also have many other things occupying your time while you are developing and growing your business. You can hire a business plan writer to compile a neatly formatted and pretty document. BUT, it takes a business plan consultant for real help writing a business plan. A consultant will help you strategize the future of your business and really plan out the right business plan direction to help you secure funding. Here is a Business Plan Consulting - Case Study that I wrote to highlight how a business plan (and an entire business direction) can change during the business plan writing process. Check it out here: Business Plan Consulting - Case Study
RAC came to me for my small business consulting services. Their passion was unmatched, but their current business model wasn't profitable at the time.
They wanted me to write a business plan for the company to use as an internal document to guide their direction and growth.
The first action was to assess the company’s status and then do a full-scale feasibility study to determine whether the company should ‘preserve or pivot’ from their current business model.
In business, a feasibility study is an assessment of the practicality of a proposed business direction or revenue stream. This is used to guide a company through the decision making process for the launch of a new business model, or the expansion of an existing business model.
A feasibility study is meant to determine whether or not a single business model is viable within the market. Whereas a business plan details the company as a whole and its future direction.
When compared side-by-side, an in-depth feasibility study contains most of the same sections that are included within a business plan. However, a feasibility study usually just details one business model or product. The business plan will detail every business model, product and service that the company offers. Thus, a business plan will have more detailed financials because the financial section will encompass the entire business.
The first step in developing a feasibility study is to assess the current status of the business.
IN this case study RAC had hired me because the company received funding and grew their staff, but the company was not profitable because of their premature growth.
Together we took a look at the current revenue streams and operating expenses… this may seem very basic, but when you’re running the day-to-day operations of a business, simple things like this often get overlooked.
The problem was that RAC had hired multiple new staff members to ‘grow’ the company, but had overlooked the fact that in their current business model the service they offered had a maximum capacity for daily participants…meaning there was a clear ceiling for revenue potential.
Before deciding to preserve or pivot we went through their ‘Best-day Analysis’ and ‘Break-even Analysis’, and we found out that they needed to be operating at capacity every single day just to realize minimal profits.
In their current business model, RAC’s daily Maximum Potential Profit was just above their daily operating expenses…
We needed to pivot!!!
Goals… Hopes… Dreams… What is the Company Vision?
In most cases you can’t simply change a lemonade stand into a fine dining restaurant simply because you would make more money.
RAC was born from the idea that the nature of childhood has changed dramatically for the current generation of kids. American childhood has moved indoors during the last two decades. This has taken a mental and physical toll on today’s kids. The ultimate goal of the company was to provide a safe and supportive environment that offered kids a chance to connect with nature, while promoting academic, personal, social and recreational development.
Keeping this in mind, we started to formulate a list of business models and revenue streams that would follow the company’s vision, yet produce more profit. The goal wasn’t to assess the ideas yet, just to get them down on paper.
This is the ‘feasibility’ part of the feasibility study.
After formulating a list of possible directions to take the business, it was now time to assess the feasibility of each possibility.
I needed to ask the questions…
What is easiest to execute?
What costs the least money to realize the most profit?
These questions can only be answered through market research, demographics studies, and analysis of the competitive environment. This research will determine the feasibility of each new business model that is proposed.
In this particular case study, after researching each new business model, we decided to preserve AND pivot. RAC’s original business model was not the problem. The cost of the new staff was the problem. The launch of a new revenue stream using the existing staff was the answer. This allowed the company to preserve the core business model that the company was founded on, and grow the business at the same time.
This feasibility study led me to write a business plan for the company that detailed preserving the current business model, and launching a new business model the would provide the company with exponential growth within their target market.
The Barre Studio, Capitola was seeking approval for a $250,000 SBA 7(a) loan to start a barre fitness studio franchise. I was happy to provide the business plan consulting that helped secure the SBA loan, and strategize the launch of her own brand.
The owner was in a bit of a chicken and egg situation. She was actually trying to get approval to become a franchisee for a nationally recognized barre fitness chain. However, she needed to prove that she could get a bank loan before the franchisor would approve her for the new franchise location.
It was kind of like putting the cart before the horse. She needed a business plan in order to get approved for a bank loan before even knowing if she would be approved for the franchise. It made sense because the franchisor wanted to be certain they were approving a potential owner that would have the ability to open a franchise location in the first place. But, it was a tough spot to be in for a new business owner.
I was contracted to write her business plan for the $250,000 SBA 7(a) loan. However, she needed business plan consulting… not just a business plan writer. Together, we analyzed her potential market area, the demographics of that area, and really honed in on how many target customers she would be marketing to.
We also analyzed the Franchise Disclosure Documents, which included the financial numbers; taking into account the initial franchise fee, annual royalty fees and required local and national marketing fees imposed by the Franchisor Agreement.
During the whole process, the franchisor sent us the proposed sales area guarantee, which only included a 2-mile radius around her proposed location. This meant that the franchisor or another franchisee could open another franchise just 2 miles away! This was a red flag, so we decided to rethink the entire idea.
After reanalyzing the market and financials, we came to the conclusion it would be better to open a barre fitness studio independent of the franchisor. It would be a slightly bigger risk without the backing of a rapidly growing national brand name. However, all the money that would be paid to the franchisor would be better invested in a marketing campaign for a new brand.
We consulted with the bank, and they agreed to approve an SBA loan for a new barre studio brand. Although they were more comfortable with lending to a franchise model, they saw the value in starting a new brand as well.
The Barre Studio, Capitola is thriving today!
I seem to say this a lot to prospective clients, just remember… you can’t buy a business plan. The ideas in your head (your branding, your processes, etc.) are what make your business unique.
You can hire a business plan writer to compile a neatly-formatted and pretty document, but it takes in-depth business plan consulting to strategize the future of your business and really plan out the right business plan direction to help you secure funding.
I've written a few articles and developed some FREE materials to help you write a business plan that is unique and attractive to investors and banks.