Business plan: a key to raise capital

 

   The primary value of your business plan will be to create a written outline that evaluates all aspects of the economic viability of your business, and the description analysis of your business prospects for some time. No matter whom you approach to raise money for your business, you will need a business plan. Venture capitalists and bankers will refuse to see an entrepreneur who does not have a viable business plan. You may have a brilliant idea, but if it is not outlined in a well-written business plan, no investor will be interested. A well-written plan shows potential investors that the entrepreneur has carefully thought through the business. All investors- bankers, neighbors, friends, or venture capitalists-crave information.  The more information you offer investors about how their money will be used, the more willing they will be to invest in your business. Your plan should be so thoughtful and well-written that the only question it raises in an investor's mind is “how can I invest?”

                Why prepare a business plan?

        The reason for any business must usually be defined in terms of society's needs. The purpose is framed in such a way that it applies not to the business alone, but to other organizations of its type.  An organization that must exist must find its purpose in providing for the needs of society because; the purpose of a business must lie outside of the business itself.

As Drucker (1970) asserted that an organization without purpose, might be an organization that is without directions. It implies that such an organization will not be able to create customers for its products since the needs of society are not taken into consideration. Hypothetically, the tailoring business, its purpose is to provide, clothing needs for the people. In the future, such businesses could diversify generally. The mission of the business can be expressed; such will be derived from the statement of purpose. It is narrow than the purpose. The mission is a very unique statement of aim that set the organization apart from others of its type. For the idea, of tailoring business, the mission may be to produce dressing materials that are needed for our teeming population.  One clear thing is that the mission must be described in terms of products produced and the market or the customer to be saved.

              Objectives of the business:

         These are the target that must be realized, though it is equal to the mission statement in the specific and concrete terms against which result can be measured. However, the objective of the idea tailoring business may be to produce two million tons of befitting dresses in a year. This is measured whether or not the objective is achieved, though, the objective cannot be one.  There are different types of objectives that are enumerated in areas of business where the results are needed.

            The business plan saves time and money:   

        When an effort is being put into producing a satisfactory business plan, the problem you might not have thought of will be uncovered.  When a such plan has been documented it will save your time and money. However, for your first customer to enjoy you, all your first questions must have been answered. How much should you charge for your product? What exactly is your product or service? What if one unit? The cost, how would you market your product or service? In what way do you plan to sell?   All these questions would have given you a lot of problems when your business had started without a written out plan.   With all these rough sheets being used, however, answers must have been generated, and roughly drafted out of the business plan must have been done.

         The acceptable business plan must include the following:

i.                     Your business idea

ii.                   Long and short-term goals

iii.                  Market research

iv.                 Market plan

v.                   Start-up and opening costs

vi.                 Management

vii.                Legal structure

viii.              Time management

ix.                 Financing

x.                   Breakeven analysis

xi.                 Accounting systems

xii.                Projected monthly income statement

xiii.              Projected yearly income statement

xiv.              Financial ratio analysis

xv.               Balance sheet.