Do you own a company? If so, we’re hoping you already have a specific, solid business plan in place. If not, let’s discuss why a business plan is essential for your company and the ways in which a plan can help drive traffic to your door and set your company up for long-term growth. All of that in a business plan? You bet.
Many business owners are not aware of the fact that some lenders and investors prefer to offer funding to startup companies and those in growth mode. Let’s talk about facts:
- There were more than 5 million new companies started in the U.S. in 2022.
- Over 50% of startup companies will continue to thrive in growth for at least 5 years.
- Only 16% of the 5 million startups founded in 2022 took advantage of startup funding.
- Of the 5 million startups, 16% failed within one year due to lack of proper funding.
(www.demandsage.com).
What conclusion does this offer for young companies today? There are funds available, however startups aren’t fully taking advantage of the opportunities to apply to investors and lenders for that funding. And, what is the best way to make such an approach? Most lenders and investors want to see a presentation that includes, yes…you guessed it… a building plan that effectively supports and presents the goals of the company.
With this understanding, let’s talk about the components within a business plan. If your company opts to use one of the services that offers business plan writers, your investment of time will be spent in reading the draft of the plan and paying a reasonable fee. If you choose to build a business plan for your company, you’ll spend time creating each component of the plan; however, if you are an excellent writer, your explanation of the company may be most effective. What’s included in the business plan?
The first part of a business plan includes an assessment of the target audience. Who are the customers and what products or services are they purchasing? What is the reason behind their purchase: a need or a want? Assess the socioeconomic image of the customers and determine the age group of the audience. Questions and answers regarding target audience members will reinforce marketing plans, operational methods and validate the products or services offered.
How does a business plan inform marketing strategies? In this area, a business plan is invaluable. If you own an interior design firm or a cosmetics company, for example, knowing who your target audience is and the socioeconomic strata and age of the members will inform which products or services you will bring to the market and, importantly, the way in which you’ll present them for sale. If marketing interior design services, you might use images on a website; while marketing cosmetics to teens and tweens calls for social media callouts, sampling parties, and a growing number of themed events. Focused, effective marketing strategies are the outcome of a comprehensive business plan.
Remember the funding available for startups and companies in growth mode? The final section of your business plan should include both the current financial condition of the company and the future income and expense projections. This detail gives investors a clear picture of the viability of the company. When using the business plan in a presentation to lenders, banks or other financial institutions, remember that a loan will be funded; however it will need to be repaid with interest on a set schedule of dates. Foregoing payment on time over the life of the loan will result in a poor credit rating and additional fees; stay on track with payments is the short lesson there.
Finally, when presenting to interested investors, you’ll receive funding that probably will not have to be repaid. However, the investor will want a percentage of ownership, typically 15%, in your company on a permanent basis. Based on this, you’ll want to carefully consider any offers.
Each component of the business plan builds on the others to form a cohesive image of the company. Whether you decide to use a business plan writer, or opt to write the document in-house, ensure it includes the essentials: an overview of the company, assessment of customers and competitors, a financial plan and forecast, and a specific marketing plan. If you determine your company needs an infusion of funding for startup or growth, complete the business plan, arrange a short presentation, and put your best foot forward while talking with potential lenders or investors. If the statistics are correct, you’re on your way to long-term growth and success!
