What will your product or service enable people to do better, cheaper, more safely, or more effectively? Ask yourself how you’ll meet the needs of each financial and human resource required to grow your venture, including your customers, investors, lenders, suppliers, and employees. Then you’ll be well on your way to creating a bankable business plan.
What will Your Business Accomplish For Your Customers?
Your customers are your only source of revenue. Why will they spend their money on your product or service, and why will they return to spend money again? If you don’t have strong answers to these questions, your business plan won’t make it to first base.
Will your store location be more convenient? Your prices lower? Your selection greater? Your hours of operation longer? Your delivery faster and cheaper? Will your store be a more fun, more pleasant place to shop?
Unless the answers to some of these questions is yes, you won’t be accomplishing enough for your customers to build the large and loyal group of shoppers you’ll need to operate a successful business.
What will Your Business Accomplish For Your Investors?
Investors buy stock in your company and share in your profits, either from general operations or from the sale of your business. Entrepreneurs face an uphill battle in attracting investors because other options offer attractive returns with less risk.
Most investments in a smaller business are riskier because they’re illiquid – the investor’s money is locked into the company’s operating expenses until the business raises additional financing, becomes profitable enough to buy them out, or is sold.
To attract investors in the face of this risk and lack of liquidity, you must offer the potential of very high returns. Investors expect credible projections in the range of 20 to 30 percent returns before they’ll buy stock on your company.
What will Your Business Accomplish For Your Lenders?
Lenders provide your company with debt financing through loans, and in exchange they’re repaid with interest. These loans have interest rates in the 8 to 13 percent range.
Since these interest rates are a lot lower than the returns expected by investors who buy stock in your company, lenders require more certainty that their principal will be returned and interest paid.Lenders want multiple assurances that they’ll be repaid their principal with interest.
First, they’ll look to the profits of your business for repayment, then to the business’s assets, and finally, to your personal assets. If your business plan can show that all of these sources of repayment are likely, you have a good chance of receiving support from lenders.
What will Your Business Accomplish For Your Suppliers?
Most businesses rely on buying goods, either to resell or to use in making other products. The companies that sell these inputs to your business are your suppliers.
Suppliers view your business as a new customer. Before a supplier installs expensive equipment in your office, they’re going to want some of the same assurances that banks require before making a loan, namely that they’ll be paid in full or get their equipment back. Before a supplier delivers goods that aren’t returnable, they’ll certainly want to be paid upfront.
As you prove your creditworthiness to your suppliers over time, they’ll likely extend credit to you, just as you may eventually offer credit to your faithful customers.
What will Your Business Accomplish For Your Employees?
If your venture requires employees, then your business plan needs to demonstrate that you can attract and keep people who have the right qualifications. Employees want fair pay, a good place to work, and opportunities for the future.
Opportunities for employees in entrepreneurial ventures come from two sources: growth and strong management. If your company is growing, there will be opportunities for promoting employees. Strong management is secure enough to give its employees the chance to build new skills.
By discussing these issues in your business plan and demonstrating that you understand both sources of opportunities for employees, you indicate that your company will work as hard for your employees as they’ll work for you.
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