Are you thinking about approaching a Bank for finance to support your business? If you haven’t already gone to see the Manager then you may not know that the first thing he will want to see is your Business Plan.

Perhaps you are not convinced that all the time and effort needed in preparing a plan is essential If so then here are the main benefits for both you and your business.

1. No matter how good a communicator you are, you will never be able to convey your vision for the business as successfully as a perfectly put together Business Plan. It provides a clear understanding as to what you want to achieve. It allows you to express your ideas in a clearer manner.

2. Too many times business owners try to sell their idea verbally and at the end of the interview with the Bank the Manager is none the wiser than he was at the start. I think you can guess the outcome of many of those requests!

3. A Business Plan will help convince both you and the Bank of the project’s feasibility and viability. There’s nothing like having all the facts in front of you to clarify the key issues

4. There’s no getting away from the fact that a business owner who plans ahead comes across as being more ambitious and more focused. A well prepared Business Plan demonstrates you have vision and that you know what you want

5. With numerous ideas floating around in your mind, the pitfalls or stumbling blocks to success are never that visible. A mind buzzing and full of ideas will rarely achieve clarity. A Business Plan forces you to put your ideas down in writing and in an orderly manner. The result of this could be you going in a completely different direction than you initially thought of, or even abandoning your idea altogether. Not a pleasant thought, but which would you prefer? The loss of your hard capital or the opportunity to re-think your idea?

6. It is an ideal tool to monitor progress against the objectives you have set yourself (we will cover objective setting later). By checking progress against your Plan, you will be able to spot if you are moving away from your original vision and so you will know what has to be put right

7. Imagine if you didn’t have this check in place; an unnoticed change in direction or a slippage in achieving your objectives, if left uncorrected for too long, could be fatal to your business. On the other hand, it may transpire that a shift from your original vision could be a better alternative, but at least recognising this change allows you to adjust your course in a planned, structured and controlled manner

8. Every action you take has a consequence, and a Plan helps make these consequences much clearer. Being aware of the possible effect of your chosen direction allows you to plan ahead, leaving you better able to cope with whatever the world of self employment can throw at you. This is one thing that “mental planning” would not achieve

9. Putting your thoughts on paper may make you realise that you need to do more research on the demand for your product or service. It could also highlight that more investigation on your competitor’s products or services is needed. Additional research could help avoid a potentially costly mistake or even uncover a hidden advantage, which you had not seen before!

10. A Plan will guide you as to how much money is needed to make an idea work. In your mind you may have a rough figure of what you’ll have to commit, but until you do a Cash Flow Forecast you may not realise that an overdraft limit will be required, in addition to a loan for your equipment. If the mention of preparing a Cash Flow Forecast brings you out in a sweat, don’t worry as later in the book I’ll be showing you exactly how to do one

11. A Business Plan will help you get funding. One of the main reasons Banks turn down requests for loans is a lack of information to assist in making an informed decision. If the Manager doesn’t have enough knowledge about your idea or business then he won’t feel comfortable enough to support you. He has to understand your business before he can say yes. Some time in the future he may have to justify to his superiors why he lent you the money, so he needs as much information as possible to back up his decision. A Business Plan will make him feel much more at ease and so more able to say yes

12. By the time you have finished writing your Business Plan you will have a total understanding of your business; its strengths and weaknesses, the environment it operates in, what could potentially go wrong, and what you can do to ensure your success. Doing your planning on the back of an envelope is not going to achieve this

You should realise by now that it’s essential to have a Business Plan; it could be the difference between success and that dreaded “f” word – failure! It’s all about understanding the importance of planning ahead.

Spend time putting your thoughts on paper in a structured and logical manner. It will pay you dividends, both in getting the Bank to take you seriously and securing the future of your business.

Robert Warlow
Small Business Success

When creating a project or finishing a task at work, are you the type who makes an outline or a checklist of tasks to do or are you the type who wings it? The latter may not be a very good idea especially if you are starting out a business. Let’s take property investing as an example. Over the years, more and more people are starting to consider this as a profitable venture in addition to their day jobs. If you want to be in this business, it’s important to have a real estate investment business plan so you can achieve your goals in no time at all.

Why It Pays to Map Out an REI Business Plan

Why is it important to create a business plan when getting involved in property investing? With a solid plan, you increase your chances of success. If you wish to earn profit with as little ground work as possible, for instance, you may join a property investment group that manages an apartment complex or condominium units. You can invest in several units but the investment group does the maintenance tasks for you in exchange for a percentage of the profit. With a solid business plan, you can weigh the advantages and disadvantages of each real estate investment instrument available and decide whether you can profit from them or not.

Step 1: Establishing Your Financial Goals

So what’s the first step you can follow when creating a real estate investment business plan? First, establish your financial goals. Are you looking forward to using the profits from your REI instrument as retirement money or do you need an extra source of income? Set a schedule for achieving these financial goals whether they’re five or ten years into the future. Better yet, determine your desired net worth. The more specific you are, the better; you can work on achieving those financial goals effectively.

Step 2: Choosing the REI Program to Go for

There are several REI programs that you can go for. First, there’s the basic rental property investment. Here, you purchase a property and rent it out for profit. It’s entirely up to you to decide whether you want to act as landlord or hire someone else to do it for you. As mentioned earlier, you can join a real estate investment group. You may also dabble in real estate trading. Think of it as the equivalent of day trading in the stock market. You’re basically holding on to a property for a few months, after which you sell them again for profit. This technique is also called flipping properties. Finally, you can invest in REITS or Real Estate Investment Trusts, which are similar to dividend-paying stocks. Unlike other types of real estate investment programs, REITs allow you to invest in commercial properties such as malls or office buildings for a better profit yield.

Step 3: Planning How to Achieve Your Financial Goals

After deciding which REI program to go for, plan how to achieve your financial goals. This is where a lot of research is needed because you have to calculate down payment amounts, monthly mortgages, operating expenses, and so on. Once your business plan is finished, you now have a clear series of steps to follow when it comes to growing your real estate venture.

Things are going pretty well, you say? Sales are up. The employees are happy. There is even a little cash left over for that special project you are anxious to start. Why start messing with a good thing? “If it ain’t broke, don’t fix it.” Right? Wrong! Many managers believe that business plans are used for only one purpose: To raise capital. While it is true that business plans are written more for this purpose than any other, it is by no means the only purpose. An often overlooked and significant benefit of a business plan is not necessarily the Plan documentation, but rather, the process itself and its impact on the management team. A business plan requires the managers to take an objective, critical look at their business. The process can change how a business is perceived, open eyes to new opportunities or focus attention on those operations that are not

The planning process involves setting organizational goals that are then translated into departmental goals that are then translated into goals for the smallest logical part of the business, (e.g. each individual sales representative in the case of a sales department). The textbook definition of the smallest logical part of a business is a “Strategic Business Unit.” If you’re not concerned about impressing people, call it a Profit Center.

Profit centers are organized in a manner that makes sense to the particular business. Some businesses may organize profit centers by classes of customers. Other businesses may think in terms of individual product or jobs. Still others think in terms of lines of business. Do you have a different pricing structure for different classes of customers or for certain jobs? Do you require higher profit margins on certain products? Do certain products, customers or jobs just naturally “fit” together? Answer these questions and you will begin to think of your business, if you do not already, as a cluster of smaller enterprises. This cluster of smaller enterprises can be thought of as an investment portfolio with each profit center representing an individual stock. Which should be invested in? Which should be liquidated? An investor has an overall goal for his portfolio. To achieve that goal he may take on higher risk investment for potentially higher return or he may accept a lower yield for proportionally lower risk.

Could your business be more profitable if some of your products, services or customers were emphasized while others were phased out? Is each individual margin on each of your profit centers adequate to justify the risk? The answers to these questions form the basis of a business plan. A formal business plan can help you manage your business better. Through it you can communicate your goals to others within your organization. The plan provides each manager with a common reference point. Departmental goals that are in harmony with the goals detailed in the business plan should also be in harmony with other departments. As the business grows, it is much easier to delegate responsibility over a particular profit center when a performance target has been set. When performance is measurable, the owner can quickly identify and correct problems. The owner will also know which managers are achieving their goals and which need assistance.

Preparing a business plan is time-consuming but is not difficult. Consider forming a planning team. The leader of the team should be able to remain objective, settle disputes between different departments and be a cheerleader for the plan. Often the team may be intimidated if the owner is also the team leader. Many businesses choose to hire a consultant to act in this capacity to insure objectivity and to provide motivation.

Motivation and involvement are the keys. If the managers contribute to the planning process, they will be supportive of its implementation. Above all, the managers (and their staff) must feel it is “their” plan. Instilling a feeling of contribution or responsibility in the employees insures their support of the plan and contributes directly to the plan’s success. A plan without support ends up on a shelf gathering dust.

Typical Sections of a Formal Business Plan:

1. Company History

2. Business Summary

3. Products or Services

4. Competition

5. Marketing Plan

6. Production Plan

7. Personnel Plan

8. Management

9. Financial Analysis

Copyright 2011 All Rights Reserved Stanley I. Simkins www.Management-Advisory-Group.com