by Colleen Mulvihill
Each year, St. Louis sees more than 6,000 new businesses launch. Whether aiming for Fortune 500 status or a vibrant side hustle, every business, large or small, requires a solid business plan. Studies show entrepreneurs with plans are more likely to launch, and 70-percent of businesses surviving five years follow a strategic plan, according to BusinessDasher. A well-crafted plan helps to support funding opportunities and can maximize marketing efforts to target ideal customers.
Know your audience
When writing a business plan, consider your audience. First and foremost, create the plan for you. Determine your targeted customer segments, define what differentiates you from your competition and importantly, test your idea. Talk to your prospective customers, do the research and make sure you have a product or service that your audience is in need of. Make sure your idea is feasible and can be profitable. By testing and researching your idea, the plan allows the opportunity to revisit, pivot or change your strategy, before investing time, money and your sweat equity.
Next, lenders will request your plan. Bankers essentially assess the risk of lending money. The key elements they focus on include the “Five C’s of Credit.” They are Character (borrower’s credit history, reputation, experience), Capacity (the ability to repay the loan), Capital (the amount the borrower has invested in the business), Collateral (assets of borrower that can be pledged as surety for the loan) and Conditions (economic and industry conditions that could affect your business).
Essential plan components
A business plan includes an executive summary, business description, market and customers, management and organization and financials.
- Executive Summary: Write this last. Highlight key elements from your business description, market data and financials to capture attention. This section prompts readers to explore the business and its projections.
- Company Description: Detail how your business is structured, describe your product/services and your target market.
- Market and Customers: A thorough assessment and insights regarding your industry, the competitive landscape and advantages and a customer profile and analysis. Study competitors to identify strengths, weaknesses and identify your market niche.
- Management and Organization: Includes information about the experience and qualifications of your management team.
- Financials: Includes realistic and well-supported financial statements, including income statements (profit and loss), balance sheets and cash flow projections.
Seek expert assistance
Remember that you are not alone. St. Louis has a vibrant entrepreneurial community, with resources to support you. Organizations like the Small Business Development Center (SBDC) offer business plan workshops and no-cost one-on-one business counseling.
A well-researched and thought-out business plan can capture and support your vision for growth and success. Start planning today!
Colleen Mulvihill is a small business development manager and business counselor. Contact her for business plan development assistance at cmulvihill@stlpartnership.com.