Wondering about the business plan basics? The plan needs to make a compelling statement about your ability to generate sustained revenues, even in a turbulent economy, and show a strong Year 3 or Year 5 net profit figure that is still in line with industry averages. Investors and bankers want to see that strong performance in your market can yield great returns, but you don't want to mislead them with inflated projections or estimates that aren't pinned back to working assumptions. So how should you proceed? Research your marketplace and the industry and look closely at competitive comparables to ensure that your own projections are in line. If you already have revenues, building from those by applying sound growth rates and patterns is a great starting point. Also cover the following in your plan:
• Who are you competing against directly?
• What industry trends or market forces might impact long-term performance?
• What are your staffing needs likely to be, year over year?
• If you stay on target, when does break-even occur?
• What impact will a 15% variance in sales have on the bottom line for investors or bankers seeking steady loan repayment?
For the most part, the answers to these questions can be teased out by creating a working financial pro forma that uses industry averages and grounded assumptions to forecast the growth trajectory. A basic financial model should show a revenue forecast, break-even analysis, profit and loss statement, cash flow tables, and a balance sheet for each year you forecast. A monthly look at the first year and a start-up summary showing how you will allocate your initial funds are also important considerations. Marketing strategy, management team summaries, and complete product and service descriptions are also par for the course. Need more help? MasterPlans can create the business plan you need in as little as two weeks. Call our experts today: (877) 453-2011.
