The last two weeks I have focused on the importance of developing a strong business plan and the components of a business plan. Today, the series will conclude by discussing the final touches of the plan: identifying competition, finding a competitive advantage, making financial projections, and including supporting documents.
- Competition – It is critical to identify who your competitors are and why you consider them to be competition. You will need extensive details such as the competing company’s product selection, the level it is currently operating on and the degree of customer service it offers.
- Competitive Advantage – Here you will describe the strengths of your business and how this gives you a competitive edge to capture your target market. Be specific on what makes your business does better than similar companies and how you plan to share this information with your target market.
- Financial Projections – These numbers need to be realistic and should reflect educated calculations. You should be able to explain what assumptions you made to reach your projections. As you work, please keep the following in mind: start-up cost and investment, break-even analysis, pro-forma income projections (profit and loss statements) for two years; and cash flow projections, also for two years.
- Other Documents – These documents vary depending on the purpose of the business plan (e.g., expansion vs. creating a new company) and the requirements of the financial institution you are working with. But here are a few suggestions of other documents you may need to include:
1. Principal owners’ tax returns for the last three years (or returns from the business if the loan is intended for expansion).
2. Personal financial statements.
3. For franchised businesses, a copy of the franchise contract.
4. Copy of resumes of all principals or business members.
5. Copies of letters of intent from suppliers or vendors. If you have letters of intent from potential clients, be sure to include them as well.
This is a basic overview of the components a business plan needs to include. Let Zions Bank’s Business Resource Center assist you in creating your business plan. Call us for a free appointment at (801) 594-8245. We are open Monday through Friday from 9 a.m. to 5 p.m. Beth Holbrook can be reached at email@example.com.