The simple answer is ‘yes’. You do need a business plan.
How will you know if you are achieving your business goals if you have not articulated those goals? The real question every business owner should ask themselves is “what type of detail do I need in my business plan?” or “do I need a working capital loan?”
Regardless of what skills an entrepreneur brings to the party – some of us are good at sales, some are masters of their craft, some are great with machinery, systems and processes.
Running a business successfully also involves:
- Identifying the drivers of your business;
- Measuring and analyzing operating results; and
- Correcting course as and when required
But do you need to pay a consultant or MBA to prepare your business plan?
Not really. If you have no business training, you might want to get help from someone who has worked on a lot of business plans. That being said, you will be best suited to participate as much as possible in developing your own business plan. It will help you understand your business better and allow you to chart your course with better data and more accuracy.
Most people do not need a 50-page, leather bound, business plan. When we provide financing to start-up businesses, we ask the owners to tell us about themselves and their business in point form.
Create Your Business Plan, Here Are The Tips
This could be the checklist you use to make sure you know what to expect in the first few years of running your business:
- What is your experience in your industry?
- Actual experience in the same or similar industry gives you perspective and gives your investors and lenders confidence
- What is your experience running a business?
- There is nothing quite like running your own business
- The best proxy for the real thing is managing someone else’s business to gain experience
- Track records are important to potential investors
- How much of your own money are you investing in the business?
- Investors want to see that you have “skin in the game”
- It gives confidence that you are serious about seeing the business through rough patches
- It proves that you have the discipline to save and have stuck with a plan
- How much debt and equity are you planning to raise from other people?
- Be realistic about amounts and the cost of capital
- How much would you invest if this were someone else’s business?
- What type of return would you expect?
- Your business has to be able to service the debt load
- What products and/or services are you selling?
- What differentiates your business?
- These are key inputs to your projections
- Are you doing something different, such as offering a new product or delivering it in a novel way?
- What is the addressable market for your product/service?
- Who is your competition and what do they offer?
- The size of the entire market for what you sell as well as what your competition is doing will determine how much of the market you could realistically capture
- This is another key input for your projections
- Prospective investors will test the assumptions you use for the inputs to your projections
- If your assumptions are off, most investors will dismiss your request right there
- Where will you get your customers/clients?
- A business owner has to understand how their business will acquire customers and what it will cost to acquire customers
- A high level Income Statement and Cash Flow projection
- Cash is King!
- You need to know how much cash you will generate and how much cash you will use
- As a follow-up to the above, do you need a working capital loan to get your business rolling, or to the next level?
Share it with Trusted People
Once you think you have it down, share your plan with as many trusted friends and family members as you can. If you are planning to do something unique, then be careful how much information you share. Consider having people sign a Non-disclosure Agreement… just in case. Invite people to critique your plan and take their input constructively. Make changes as you learn more about the industry and your business. Even after you have launched, you should always be referring to the plan and correcting course.
Also, although there are common elements to be successful in just about any business, it is helpful to hire professionals (i.e. your lawyer and accountant) who serve other clients in your industry. There is no substitute for specific industry experience and expertise. They can guide you on setting up your company structure and books and introduce you to others who can help you along.
And remember that you are not alone on this journey. Every member of the Armada Team is passionate about helping our customers grow their businesses. Please reach out to us with your plans. We would love to help!
When looking for equipment leasing, equipment financing, assistance with working capital loans, or searching for leasing companies that you can trust, you can rely on Armada. Our mandate is to be truthful and let you know where you stand. We work for you to structure the right leases and financing to you to achieve your business goals.
Do not hesitate to get in touch to discuss your equipment financing options. Our knowledgeable and friendly capital equipment financing professionals are happy to serve you to help you grow your sustainable and profitable business.
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