Financing Your Small Business

Structuring Your Business Plan

Before discussing the contents of a business plan, it needs to be clear that a business plan is a management tool—it is not a legally required docu­ment. If you have an existing business and intend to continue that busi­ness without specific plans for expansion or other significant change, then you may not yet need a business plan. If you are going to register with eBay to sell your grandmother's china online, you may never need a business plan (although you do need your grandmother's permission or that of her estate).

A business plan should be a living document that evolves with the busi­ness and is constantly a work in progress. Business planning is a constant process, not a brief project. Internally, the business plan is a useful manage­ment tool when it is continually updated to reflect the marketplace. It should not be treated as a paperweight. Externally, the business plan often secures bank financing and attracts private or institutional investors. When your company is more mature, a business plan may serve as a basis for a strategic alliance, a merger, or an acquisition.

Assuming the business has been determined to be generally feasible, turn to the specifics of the plan. A general outline for a business plan follows.

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Figure 2.2: GETTING INVESTOR ATTENTION

Investors want to know some very fundamental information. Do not be intimidated by the questions that follow. Very few beginning businesses will have all of these questions fully answered from the start. However, sophisticated investors get hundreds of business plans to read. Your task is to write a business plan that is sticky—a plan that piques the interest of an investor to look further at your business.

□ What is your business?

□ What is the market for the product or service?

□ How big is the market for the product or service?

□ Have you segmented the market into digestible pieces?

□ What is the revenue model (i. e., how does the business identify and sell to its customers)?

□ What have you done to develop the business model?

□ Have you identified all the resources you need to support the revenue model?

□ How does the business make money?

□ Why is this product or service unique?

□ What qualities give it a competitive advantage over existing products or services?

□ How is it better, faster, and cheaper than other choices available to your customers?

□ What tangible assets does the company own?

□ What intellectual property (trademarks, patents, trade secrets) does the company own?

□ Who are the people in management and what are their backgrounds?

□ What does the investor get for the investment?

□ How much will the business be worth?

□ How long will it take to be profitable?

□ What is a reasonable risk assessment?

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Financing Your Small Business

Limited Liability Company Formation Documents

If, after consultation with your professional team, you decide to form a lim­ited liability company, you will need to file Articles of Organization with the state and draft an internal …

Corporation Formation Documents

After consulting with your professionals, you will most likely need to form an entity to raise capital. Most entrepreneurs will form either a corporation or a limited liability company. This …

Business Plan

As part of your business strategy, planning, and feasibility analysis, you will commit your plan to paper. The document produced is typically called a business plan. The purpose of a …

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