It is imperative for a company to design a business plan if you, the owner is hoping to allocate funds to start up or fund a new project. There are two main types of business plans a company usually designs, one is a business plan, the other a strategic plan.
The business plan is nearly always designed before the firm is started. The purposes of a business plan are generally to gain investment, usually from either banks, investors or angel investors. No one will wish to invest money into your business if you do not have a clear plan. The plan should include a mission statement, a strategic plan, a management plan, a financial plan and an operations plan. All these should be clearly defined and set out. Once these are concluded you are set to approach an investor.
For some of those who are first time entrepreneurs or starters of a new small business, it can be quite daunting to approach an investor but being properly prepared will certainly help. Furthermore, having a clear idea as to who your marker sector is to target and a strong idea about how to market to this segment of the market is vital as well. As is having solid ideas of what your competitors are doing in your sector.
Which leads us to the second type of plan to be made which is a strategic plan. A strategic plan is usually always designed while the firm is already operating and is primarily used to analyse a new opportunity the firm is wanting to take up. The firm needs to look strategically and decide whether this is a good move or not i.e. how risky is this venture. Also, stakeholders and shareholders will need to be aware of this plan and so a strategic plan is necessary to then communicate with these external and internal stakeholders.
The main feature of a strategic plan is the SWOT analysis. This stands for Strengths, Weaknesses, Opportunities and Threats. The firm needs to evaluate how its strengths and opportunities can overcome its weaknesses and threats in relation to its competitors. The strategic plan will evaluate these and then will be able to make a clear decision on how to move forward in the direction it wants to.
Investors will want to know and see if the firm has a good understanding of its position in the market it is engaged in, and once this is determined they will be more open to look at financing your firm. It is vital to present yourself properly and this should ensure you success in gaining finance!
Business Financing