Wednesday, October 26, 2011

Business Plan for Precision Auto Detailing


A business plan is an essential part of any small business because of its ability to guide the company. It charts the future course and defines strategies for achieving the business goals. The business plan defines risk for the owners and establishes a game plan. It also provides management with a base line so that they can track their progress and see whether or not they are on track for achieving specific goals. Business plans are a necessity for any company that intends to attract capital. A business plan focuses on the processes that will be implemented to reach target goals. A business plan increases the chances that a small business has of being successful.

There are several elements that a well written business plan should possess. A business plan should fit the needs of the business and be specific. It should be realistic and implementable. Targets should be set throughout the plan so that the plan is measureable. Management is going to need to have the ability to check and see if everything is on track, and measurable deadlines are one of the best ways of doing that. The plan should lay out with whom different responsibilities lie and define clearly any assumptions being made. Most importantly, a business plan shouldn’t be written and forgotten about. It should be “kept alive by follow up and planning process” (Berry, 2009).

The elements of a business plan should be specific to the business that it is outlining.  According to Scarborough, Wilson, & Zimmerer (2009), the elements that should be considered for the business plan are:

·       an executive summary

·       mission statement

·       company history

·       business and industry profile

·       business strategy

·       description of product and services

·       marketing strategy

·       owners resumes

·       plan of operations

·       pro forma financial statements

·       loan or investment proposal

The best elements for Kyle and Chad to consider would most likely be the background of the company, description of services, business strategy, plan of operations and loan and investment proposals. These elements would share with a potential creditor what it is they do, how it’s been going, what they are proposing and how they plan to carry out their plan. Once a bank has read the business plan, they should know everything Kyle explained to me. Kyle needs to help the banker to understand why he should take a chance on Precision Auto Detailing.

            There are several things lenders are looking for when they first read a business plan. A stable capital base is one of the most important things that a lender wants to see before they will even consider granting a loan to a small business. A statement of cash flow is important for a lender to determine that the small business’s capacity to meet its financial obligations. They want to know what assets you have that can be used a collateral should you be unable to pay back the loan that they give to you. Lastly, Scarborough, Wilson, & Zimmerer (2009) believe lenders look for information on the conditions surrounding the business such as “interest rate levels, the inflation rate, and demand for money” (p. 201).

            When you are finally ready to present your business plan to potential lenders preparation is key. You need to appear well informed and prepared for the endeavor that you are taking on. A well rehearsed 10-15 minute presentation should be developed beforehand that informs the lender of all of the aspects that he is looking for before he can make an informed decision about your loan. The presentation should summarize the background of the small business, the market analysis, why the small business has a competitive edge, the qualifications and experience of management, and a financial analysis that focuses on the lender return on investment. The presenter should be enthusiastic about the venture, use visual aids when possible, speak in layman’s terms, and be prepared for questions.

            While no one can guarantee that a perfectly drawn out business plan and flawless presentation will eventually lead you to the capital you are trying to obtain, it is the best possible way to increase your chances. Preparing a business plan that answers everything that your lender needs to know will make your small business seem much more competent. According to Marte (n.d.), “the business plan needs to show the lender that providing you with a small business loan is a low-risk proposition”. If you have managed to develop a worthwhile concept for a successful small business investors will follow.




References

Berry, T. (2009, February 18). Planning Startups Stories. Retrieved October 20, 2011, from 8 Factors that Make a Good Business Plan: http://timberry.bplans.com/2009/02/some-key-questions-on-business-plans.html

Marte, N. (n.d.). About.com. Retrieved October 20, 2011, from Small Business Loans 101: http://sbinformation.about.com/od/creditloans/a/ucbusinessloan.htm

Scarborough, D., Wilson, D., & Zimmerer, T. (2009). Effective Small Business Management: An Entrepreneurial Approach. Pearson.

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