Rogoff Edward G - Bankable business plans

PART I

When individuals come into the Lawrence N. Field Center for Entrepreneurship at Baruch College and sit down in my office, they usually open the conversation with one simple sentence: I want to start my own business.

The next statement almost invariably includes one of the following four predicaments: I have a specific idea for a business, but I dont know what to do next, or, I know what I want to do and how I want to do it, but when I went to the bank for a loan, they said I had to show them something in writing before they would even talk to me, or, I want to buy a business that I think I can make more successful, but I dont know how to start, or, Im an inventor and Ive come up with a fabulous new product, but I dont have a clue how to get it manufacturedor sold.

The answer to all of these appeals for advice, whether the individual is opening a restaurant, taking over a competitors ocarina manufacturing plant (an ocarina is a small, simple wind instrument), building a better mousetrap, selling a new kind of soap, or offering expert financial services to Wall Street investors is: You need a business plan. Every one of these entrepreneurs is focused on a single goal: to build a successful enterprise that delivers profits and satisfaction to each owner. And no matter what that potential business is, there is one basic tool to employ in achieving that goal: a clear and compelling business plan.

Since Im always interested in the types of businesses my clients want to develop into profitable and satisfying ventures, I ask them to tell me about their aspirations for the product or service they hope to provide. As they talk, I can sense their excitement and enthusiasm, even if theyre uncertain about the next step. My job is to channel their passions into that next step: writing a strong business plan. And thats exactly what I am doing for you in this book.

Bankable Business Plans will help you create not only a strong business plan, but a bankable business planone that attracts financial support by meeting the needs of bankers, partners, and investors. By addressing the issues that are important to potential funders, you can convince them to believe in your concept because it will bring them success, as well as satisfaction to you. A bankable business plan is distinguished by certain characteristics: it serves a specific purpose, it doesnt follow formulas, it does follow good business thinking, it can be created regardless of your skills, it focuses on financial issues, and it can be used for starting, growing or buying a business.

A good business plan is simply a document with a specific purpose. It will:

Most books and programs about creating business plans skip this step of defining the plans main purpose, which results in plans that dont address the specific concerns of potential lenders, investors, or partners. Bankable Business Plans will enable you to define and accomplish this primary objective, while expressing your own confidence in your concept and attracting the support you need to start a new venture, grow your existing business, or purchase an established company.

Most books and software packages about creating business plans urge the reader to follow a template or copy an existing plan without first doing the conceptual work. This method produces a plan that sounds canned, generic, and lifeless, especially to someone who analyzes hundreds of proposals every month. It takes an experienced investor or lender about two seconds to spot a formula plan. Your business concept, and the work you accomplish to bring it to life, will make your plan compelling, and motivate others to support your efforts. Bankable Business Plans will show you how to create a unique, exciting, convincing, and thorough description of your proposed venture.

Creating a business is a process that moves from conceptualization to implementation, and creating a business plan should follow the same sequence. Some books insist that the best way to begin a plan is to answer dozens of highly specific questions, which wont help if you havent done the conceptual work first. Answering a question such as, What is your profit goal for years one through five? when you start to work on your plan, is rather like being asked to write a shopping list before youve decided what to cook. Bankable Business Plans takes you through the entire process from the conception of your initial idea, to testing it against basic criteria, to researching the market and the competition, to developing strategies, and, finally, to creating a plan for implementation. Since your resulting business plan will be based on the steps you took to create your business in your mind, it will be different from any other business planand it will be yours alone.

Many books and software packages assume that their readers are highly computer literate, with extensive knowledge of Windows, word processing, and spreadsheet programs. These are excellent skills to have and can save you tremendous amounts of time, but Bankable Business Plans is written for people at all skill levels. Although this book does not pretend to be an accounting text book, it will explain exactly what you need to learn and where youll find the information to complete your financials. Reading this book is about creating a unique, effective business plan based on your enthusiasm for your venture and your willingness to learn about your industry. The only real skills you need to create a bankable business plan are your passion and your perseverance in learning how to do it effectively.

Most other books and programs simply ignore the fact that youre writing a document about an enterprise which, like all businesses, exists to make money. Since the people reading your plan will decide to invest in or lend money to your venture based largely on this document, your plan must address their issues. Bankable Business Plans not only takes you through the steps of producing quality financial projections, but tells you how to identify and satisfy specific concerns that matter to potential lenders and investors. Moreover, it is the only book that shows you how to make use of the Risk Management Association (RMA) data to establish your plan as credible. Since most bankers and many investors will compare your projections to the RMA data, knowing how to obtain and use these numbers is like being given the answer key to a test ahead of time.

Whether youre starting a new business, growing an established business, or buying an existing business, you need to create a strong and bankable business plan. Even though the circumstances may vary and certain strategies and funding sources may be more effective than others, your basic business plan will still follow the same primary principles outlined in this book.