Ever notice that a successful sports manager or coach has a game plan prepared for each team to be played? That is the same strategy needed by a small business, but for a longer period of time. Just as important is that lending organizations are more frequently asking businesses to submit a detailed plan for their organization’s growth. A well-defined business plan can lead to a higher rate of loan approval and to more favorable loan rates.
A good business plan should contain the following:
- An executive summary outlining ownership, goals, financial projections and revenue and profit highlights.
- A summary of the history of the business, including key staff members, structures and equipment owned, and other success factors.
- A layout of the strengths, weaknesses, opportunities, threats and risk management strategies.
- An analysis of the industry, customers and competition in the area.
- A marketing plan that addresses products and services, promotions, distribution, websites and customer management.
- A sales plan that highlights revenue, customer needs, products and services.
- An operations section outlining management team, board members and milestones.
- A financial plan that includes revenue and profit highlights projected overheads, cash flow analysis and marginal cash analysis.
- The appendix should include historical financial reports prepared by outside specialists.
- Finally, an action plan and strategy for improvement of the business.
The business plan should be a long-term projection up to five years. As with the sports manager who has to make adjustments during the game for unexpected developments, the business owner needs to review and reevaluate the long-term plan regularly to determine if goals are being met or if a sudden event (such as economic fluctuation) changes the direction of the business. The key is still to develop a good plan and then execute it with the oversight to be able to make changes when circumstances change. A lender wants to be assured the business owner is prepared for the risks and opportunities, and the owner wants to have a set of goals to reach with a method of tracking those achievements.
In summary, a well-defined business plan shows that the business owner has a path to success that benefits his or her business and which proves attractive to a lending agency. It is project well worth the time and financial investment. QCBN
Tom Blake is a business coach with Action Coach Arizona and a former owner of multiple businesses. He can be reached at
928-379-3842 or at tomblake@actioncoachaz.com if you have any questions.
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