4 main parts of a business plan

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4 main parts of a business plan

The reason is simple: This is not to be taken lightly. Since lenders and investors are holding their purse strings tight these days, an inadequate business plan could keep you from getting the financing you need. And be sure the plan realistically identifies opportunities and obstacles, with a strong focus on the latter.

Below are three areas of a business plan that need special attention. Handling them wisely will strengthen your business from the outset and uncover issues that could cause problems down the road.

A strong management team with a mediocre idea is more attractive to many investors than a weak management team with a great idea.

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If you have partners, outline which areas of responsibility each of you will undertake as well as the experience that each of you brings to the venture. Perhaps you have no technology experience or have never overseen marketing. The Financials Most of the reasons businesses fail are financial, according to the Small Business Administration.

They include, for example, lack of capital; overinvestment in fixed assets, like office space and equipment; poor credit terms, like cash-on-demand for orders and steep interest rates on credit lines; and poor management of business funds.

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If you have a complete set of financial statements and projections, your business plan can identify all of these potential trouble spots before you launch. At a minimum, your business plan should have best- and worst-case scenarios in four key areas: For example, you may have revenue from a big quarterly order as well as a steady stream of income from monthly sales.

Identifying dry cash-flow periods will let you allocate additional resources to those slow times, avoiding cash crunches that can make it hard to pay your bills.

Cash flow is different from profitability the amount of money left after subtracting expenses from revenue.

4 main parts of a business plan

Your business can be profitable, but have poor cash flow. Both situations are deadly. Of course, different businesses have different timelines for breaking even and, ultimately, becoming profitable. Be sure that the cash on hand to start your business, plus incremental revenue increases, will sustain you until your venture begins breaking even.

Where will your sales be in six months?

Elements of a Good Business Plan

A year from now? Trade associations and regional Small Business Development Centers SBA resources that help entrepreneurs with everything from market strategy to basic research can help you determine sales metrics for your area and industry.A business plan is made up of a narrative section that includes a description of the products or services, short- and long-range objectives, discussion of the industry, business model, competition.

This business plan addresses all relevant concerns by presenting a comprehensive account of a month-by-month marketing strategy coupled with an extensive report on . This is the second in a four-part series by Hal Shelton, SCORE small business mentor and author of The Secrets to Writing a Successful Business timberdesignmag.com month, we looked at “Why You Need a Business Plan (and the Best Style for You).” This month, we reveal four must-have sections of every business plan.

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4 main parts of a business plan
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