How to Develop a Business Plan

How to Develop a Business Plan Before Starting a Small Business

If you have reached the stage of your working life where you are fed up with working your butt off for someone else, then you are probably considering going into business yourself but donít really know where to begin. Having at least come up with an idea for a business you would like to get into, your next goal will probably be to find out how to develop a business plan yourself or how to develop a business plan with the help of a business management consultant. Good business plan preparation is essential before approaching any lending service or bank for a new small business loan.

Some knowledge of the basic principles of accounting is very helpful during the business plan preparation stage; this entails the recording of all business transactions in a logical manner, usually date sorted. Business plan writers usually use a spreadsheet such as Microsoft Excel to display all the business transactions, where the data is shown on several pages of the spreadsheet;

usually there is a summary page which will list individual expenditure and income, recorded on each day, and then various other pages which will list all the occurrences of a particular item - for example, a hotel business would list purchases of alcohol, food, milk, bread, frozen items, new bedding, equipment, renting of pool table, etc showing details for each of these items, identifying all purchases of milk, say, for the present month.

Now when you are preparing a business plan for a new business with the purpose of obtaining a loan, you will need to show it predicting what you think will be the figures in the future rather than showing the figures that have occurred up to the present time. So writing a business plan involves not only predicting expenditure and income for the next 2 years but also coming up with some substantial evidence to prove that the figures you are using can be substantiated with hard facts.

A business management consultant will always recommend at least some market research be done to form the backbone of the business plan; this could be achieved by simple canvassing of passers by if the business is town based, and recording both the questions and the answers in a document; note that the way that a particular question is phrased can vastly influence the outcome of a survey.

In addition to a very good business plan, a small business lender will need details of your credit history and personal resume, the reason for requiring the loan and how the money will be spent, forecast balance sheet and details of all expenses that will happen from the start of business, e.g. property mortgage, leasing of equipment, staff wages, stationary, marketing costs, etc. If it is a pre-existing business, youíll also need 3 years of financial statements and a list of current debts on the business and how you intend to pay these off as well as the bank loan.

Knowing how to develop a business plan is a great help before starting a small business but then it must be followed by much hard work; a small business lender will be very harsh on someone who approaches them with a half-baked business plan, or someone with low self-confidence due to lack of knowledge about the business and / or its clients.

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