The bank wants a business plan. You have collected all the information on the external environment, company strengths and weaknesses. You thoroughly understand the market and financial rationale for starting or expanding your business.
Maybe that wasn’t wasted time…
Now it’s time to put the plan together. Typically the business plan will start with a one page executive summary. It will include the compelling reasons for the expansion, including the customers you have in place. For a start up, the executive summary will highlight the advantage of your business over the existing competitors out there.
Then you move into the details. A business plan typically starts with the marketing plan, the reason for the business’s existence. It will include your target market and how attractive it is to be in that market. Include market growth, trends, size, etc. Demonstrate a clear understanding of market needs, backed by objective data where possible.
Detailing your competitive advantage is key. Here it is critical to provide information on your competitors in order for readers to objectively evaluate the power of your business’s advantage.
Translate the competitive advantage into a value proposition. How valuable is your advantage to your customers? This information will feed into your business model ie, how you plan to make money.
Wind this all up with your promotional plan: how you plan to position your product or service in the market; product features; the pricing level, especially versus the competition; the promotional plan for getting your message to the market, including direct sales; and how you plan to deliver your product to the market.
Operations is the next key piece of the business plan. This is the opportunity to explain in detail how the product will be manufactured or the service delivered. It is important to outline the rationale for the key expenses and investments needed, as this will provide the information to support the numbers in the upcoming financial plan.
Ensure the competitive advantage is delivered by the operations, if that is your source of advantage. The more proof there is to demonstrate the advantage will be delivered to the market, the more credible the plan is to the bank — and verfied for your own peace of mind.
The next sections of the business plan will include the other key functions of your business. This will vary according to the business. Possibilities include Regulatory, Research and Development, and Information Technology. Again, explain the expenses, investments and how these departments deliver on your competitive advantage.
Finally, crucial to your business plan are the financials. These will include your pro forma (projected) income statements with your revenues and expenses. It will also include your pro forma balance sheet, with the impact of the profit or loss on your assets, debt and equity. The assumptions need to be clear. It is a good idea to have an accountant review these numbers, if not help you put them together.
For the variables that present the most risk, it is a good idea to include a best case, worst case and most likely case. This will show the impact of shifts on the financials, which clarifies the variables to most closely monitor. An accountant can also assist with the sensitivities.
Following the above steps will yield a solid business plan for the bank, and for your own management of the company. Here’s wishing you the best of luck with your new business, or expansion.
Photo Credit: Robert Nunnally
For more resources, see the Library topic Business Development.