CHAPTER 1 - PLAN FOR YOUR
Capitalizing your business is a full time
endeavor. Developing your business plan is the single most important step
you can take toward your success. To maximize your potential to receive
capital, it is vital that you develop a business plan that will guide
your company and allow outsiders to picture where you are going and how
you plan to get there. Take great care in preparing your plan, it is the
road map that will lead you where you want to go.
Lenders or Investors, which way do I go?
They tend to look at transactions from very different perspectives.
Lenders are mostly concerned with "Can you repay?". While investors
are more interested in "How far can you go?" There are certain items
of information common to both. That will be the information to be
disclosed at the start.
This is it! Grab them here and you may never lose them. This summary
is an overview description of your product or service, its market,
your niche, the management, the mission, company structure, pro forma
highlights, funding request, use of funds and proposed terms. No more
than two pages, sell the sizzle not the steak.
EXECUTIVE SUMMARY WORK
Give a brief yet concise explanation of the following items.
Remember, you will fully detail and support each of these later on in
your plan, so keep it short.
Time in Business:
Use of Funds:
Collateral or Equity
Briefly describe what your company is all about.
Your reader needs a summary of how this venture came to be.
Where did the idea come from? How did it evolve? Who is responsible?
Be concise but give dates, background, etc. Paint a short picture from
how you started, to where you are today.
One sentence defining what the Company is all about. Think
about it and "make it mean something". Don't just write a
bunch of flowery words.
Clearly identify what stage of funding you are at. Is your business a
start-up, initial growth, positioning for going public, seeking a
strategic partner, looking for near future acquisition or sale?
It is important for any funding source to know where you fit in the
economic food chain. What niche is your business exploiting that will
make it jump over your competition? What are you doing that is better,
faster, or newer than what everyone else is doing? For this part you
must be very detailed. Remember the investors know nothing about your
business. You must prove to them you know what you are doing or are
about to do.
This is yours or a third parties research that supports your
determination that there is a market and a need for your product or
service. This will form the back bone of support for the price points
and revenue assumptions contained in your pro forma projections
indicating to investors or lenders how your company can turn a
Here is where you briefly highlight, graph and preview your
outstanding financial projections. This provides a glimpse into where
your gross sales, net income, net worth, etc. should be in years one ,
two and three. Remember this is only an overview. It should contain no
details or support information. That will come later in your financial
pro forma section.
Menu I To Chapter 2