Importance Of A Business Plan And Issues With Start Up

1167 words - 5 pages

Answers obtained from SBA online, Quicken small Business site, and Entreworld.org.1. What is the purpose of a business plan, and why is it an essential first step for a start-up firm?A business plan closely describes your business, analyzes your goals, and functions as your business's resume. It helps you designate resources properly, handle unanticipated dilemmas, and make good business choices. The importance of a compendious, cerebral business plan cannot be overemphasized. A lot depends on: outside funding, credit from suppliers, management of your operation and finances, promotion and marketing of your business, and achievement of your goals and objectives. If you are approaching a banker for a loan for a start-up business, your loan officer may recommend a Small Business Administration (SBA) loan, which will necessitate a business plan.Motives for writing a business plan include: to support a loan application, raise equity funding, define objectives and describe programs to achieve those objectives, create a regular business review and course correction process, define a new business, define agreements between partners, set a value on a business for sale or legal purposes, and evaluate a new product line, promotion, or expansion. A business plan should confirm that your business will produce sufficient revenue to swathe your expenses, but a business plan may vary depending upon who your audience is. If you are proposing a plan for your colleagues and partners, for example, to swell an existing business, then the focus of that plan may be more operational than financial. A great business plan is the best way to show bankers, venture capitalists, and angel investors that you are worthy of financial support. Make sure that your plan is clear, focused and sensible. Then demonstrate to them that you have the utensils, talent and team to make it happen.2. What are some of the sources for financing that these websites recommend exploring?Grants usually support non-profit organizations, intermediary lending institutions, and state and local governments. Most small or growth-stage businesses use limited equity financing. As with debt financing, additional equity often comes from non-professional investors such as friends, relatives, employees, customers, or industry colleagues. The most common source of professional equity funding comes from venture capitalists. There are many sources for debt financing: banks, savings and loans, commercial finance companies, and the U.S. Small Business Administration (SBA) are the most common. Family members, friends, and previous acquaintances are all potential sources. For many small businesses, even a loan from the Small Business Administration seems too large. That's why the SBA started its Microloan Program. The Small Business Administration makes funds available to nonprofit intermediaries which make loans to eligible borrowers. Advances from suppliers work only if you have a contract in hand for your goods...

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