Why you need a business plan
A Business Plan is a great way to start with funding options. Most lenders and investors will require some type of business plan before they will consider funding your business venture. The technical definition of a business plan is “a document setting out a business’s future objectives and strategies for achieving them.” These plans are great for securing funding, but they are also helpful in planning out your business, how you plan to make money, laying out specific product choices, your management team and many other factors that will ultimately help you create a business that has a chance to succeed in this world.
Is there more than one type of business plan?
There are two major types of business plans. There is a traditional plan and a lean startup plan. Both have their advantages and disadvantages. Here is a bit about both types:
Traditional Business Plans: This type of plan is very detailed, takes more time to write, and is comprehensive. Lenders and investors commonly request this plan.
Lean Startup Plans: This type of plan is a high-level focus, fast to write, and contains key elements only. Some lenders and investors may ask for more information.
Most investors and lenders will want a Traditional Business Plan, or if presented with a Lean Startup Plan, they may request additional information on finances and startup costs.
What does a Business plan need to include?
There is a lot that goes into both versions. With a traditional business plan, you will typically want the following:
- Executive summary
- Company Description
- Market Analysis
- Organization staff and management
- Service or product line
- Marketing and sales
- Funding request
- Financial projections
- Supporting documents
While in a Lean Startup Plan, you’ll want information such as:
- Key Partnership
- Key activities
- Key Resources
- Value proposition
- Customer Relationship
- Customer segments
- Cost structure
- Revenue streams
Information can be found on sba.gov for more information on both of these plans and some example of them can be found here. There is a lot that goes into business planning and as an added note, most lenders and some investors may require a life insurance policy on you, the business owner, or your key person. In the event something happens to you the investors or lenders can recoup their money.