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“It’s OK to be optimistic if you can justify it,” Allen says.“In general, you don’t want to stand out in a negative way by being too optimistic.” You want to show that your business can generate strong enough cash flow to cover the regular debt payments on a loan.It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.
If you’re applying for a loan or looking for investors, a business plan shows you’re prepared and have fully vetted your business idea, says Craig Allen, a financial advisor who teaches business plan writing classes at Southern New Hampshire University. The key is to provide a clear explanation of the opportunity presented and how the loan or investment will grow your company.
“If you have no financial forecast, which is part of the business plan, it’s very difficult to show the bank how you are going to repay the loan,” Allen says. For example, if your business is launching a second product line, you might explain how the loan will help your company launch the new product and increase its sales by 50% over the next three years.
This section can also highlight the strengths of your business and focus on what sets your business apart from your competition.
[Back to top] If you’re a startup, you may not have much information on your business financials yet.
However, if you’re an existing business seeking small-business loans, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.
Guidelines For A Business Plan Case Study On Hr Issues With Solution
You may also include ratios that highlight the financial health of your business, such as: [Back to top] This is a critical part of your business plan if you’re seeking financing or investors.Planning is the most crucial yet often overlooked aspect of starting a new business.Proper business planning can literally make or break a new business, so it is wise to take the time to develop a foolproof business plan to maximize your chances of success.[Back to top] List any supporting information or other additional information that you couldn’t fit in elsewhere, such as resumes of key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit history.If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors, taking their mind off your business and putting it on the mistakes you made.If writing and editing aren’t your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.Focus on the key elements of your business plan and avoid getting too bogged down by the technical aspects of your business or using too much industry jargon.You can always put supporting information or other important details in the appendix.It should also include the percent ownership that each owner has and the extent of each owner’s involvement in the company.You can also discuss current or pending trademarks and patents associated with your product or service.