Quite a few women wrote me after my last email to ask if they needed to submit a business plan to apply for the womensnet.net Amber Grant. I’m glad to say the answer is no. Applying for the Amber Grant takes only a few minutes of your time. Not only is it simple, but I dare say it’s even fun for most women to share their ideas and thoughts about business ownership.
But – you should know that almost all banks, lending institutions, investors, or grant underwriters will want to see your business plan before offering you money for your small business. (Honestly, some of the most successful business ideas I’ve been involved with were outlined over several drinks at a local pub – but most banks don’t accept notes on a bar napkin as a business plan… too bad!!)
With all that said, if you’re a woman entrepreneur looking for money for your small business, you should most certainly take the time to create a business plan. I don’t want you to be intimated by the task, so I thought I would take the time to give you a general idea of what banks or grant underwriters are looking for – along with a few tips to help sway them.
The fundamentals of a business plan are simple. Anyone considering giving you money for your small business wants to know two basic things. First they want to know some details about your business. And, second, they want to know how you plan to grow your business in the future. Not too complicated, right?
Now let’s break down the essential parts of creating your small business plan:
1. Title Page – This page identifies your business and contact information. It should include the name of your business, mailing and/or physical address, phone number, fax number, email address, website URL, as well as the names of the owners of the business. It’s also a good idea to note when your business was formed, and what type of legal entity your business is formed under.
2. Table of Contents – Tell them what you’re going tell them. Give the reader a sneak peek of what they can expect to see in the rest of the document. Just write a sentence or two for each section to pique the interest of the reader.
3. Introduction – Start with a brief one-page summary of why you created your business plan. In other words, tell them your objective. In this case, you will explain why you need money for your business. Next, you should describe your business. Nothing elaborate. Just get the point across in a few sentences. The final part of the Introduction section is to tell the potential lender, investor or grant underwriter about your background and how you were inspired to come up with your business. Include your special skill-set or experiences that are relevant to your business venture. This is your chance to sell them on your business’ most important asset – YOU!
4. Business Description – You want to explain to them the specifics of the products or services you provide. Please take this time to brag a little about what you do. For example, if you are starting a baked goods business, don’t just say you sell baked goods. Give a reason of what makes what you unique. You have a baked goods business that uses only vegan and organic ingredients. Or you specialize in wedding cakes. Or, as one small business owner near me has named her storefront – she is the “Pie Lady.” Guess who every restaurant owner in town thinks of when they want to buy the best pies for their customers?
5. Personnel – A potential lender wants to know about any other key people who are helping you with your business. If other folks are directly involved in your business, your small business plan should mention it. Who are they? What will they do? And what are their special skills and experiences? Be sure to talk up other members of your team.
6. Operations – This section describes the day-to-day operations of your business. You should take the time here to explain the procedures for production and delivery of your goods or services. It’s also worth telling the reader about some boring but important stuff – your equipment needs, your hiring procedures, the details of any vendor contracts, lease agreements, insurance policies. Yes, boring, but any astute investor will be impressed that you had the smarts to mention these crucial items.
7. Marketing – Here’s where the rubber meets the road. Anyone with an interest in giving you money will want to know how you plan to make MORE money with your business. Estimate your customer demand along with identifying your market and its size. Make sure to explain how you’re going to market your product or service. Let them know who your competition is, and your marketing strategy for making your business stand out. What is your pricing strategy? What makes your product or service unique? Here’s a tip: You might want to actually write this section first when you create your business plan. It will take the most time and energy because marketing is the cornerstone to your success. You have to know who you’re selling your product or service to and how to sell it.
8. Financial Management – This might be the most scrutinized part of your business plan. Here is a check list of what you should include:
* Projected start up costs: How much money will you need to get your business started, and what are you going to be spending that money on.
* Monthly operating budget for the first 2 years: How much money will it require to run your business each month.
* Projected monthly cash flow for the first 2 years: Cash flow shows how much revenue your business earns, minus how much it spends.
* Projected income statement got the first 2 years: How much revenue do you expect to produce in your business start-up phase?
* Your projected profit and loss: Show how much money you expect to make.
* Your break-even point: How much profit will you have to make to pay back your initial investment?
* Your compensation for working the business: If you tell a lender that you don’t plan to take any salary, you had better be independently wealthy! Otherwise, factor in a reasonable salary.
* Your personal financial statement: They’ll want to know most everything about your personal finances.
* Supporting Documents: It’s a smart idea to include any supporting information that would help convince the reader that your plan is viable and your working assumptions are reasonable.
9. Conclusion – These are your final thoughts to share. Mention again your business aims, and the amount of money you’ll need from a third party. This is also a good place to restate your passion and personal commitment to your business.
Please let us know what your thoughts are. We enjoy your feedback.