If you have a complete set of financial statements and projections, your business plan can identify all of these potential trouble spots before you launch.
At a minimum, your business plan should have best- and worst-case scenarios in four key areas: Operating budget.
The reason is simple: A business plan enables you to address on paper many of the variables that make small businesses fail. Since lenders and investors are holding their purse strings tight these days, an inadequate business plan could keep you from getting the financing you need.
It’s best to complete your business plan before you devote much time and money to your new business, and then revisit it as your enterprise grows, adjusting it as necessary.
I recommend using Biz Stats, a free online tool that helps you compare your business’s expense ratios with those of others in your industry. This identifies your business’s sources of income and when they’ll arrive.
For example, you may have revenue from a big quarterly order as well as a steady stream of income from monthly sales.
And be sure the plan realistically identifies opportunities and obstacles, with a strong focus on the latter.
Below are three areas of a business plan that need special attention.
Handling them wisely will strengthen your business from the outset and uncover issues that could cause problems down the road.
The Management Team “One of my mentors used to tell his business school classes there are three things we invest in: Team, team and team,” says Eric Chin, general partner at Crosslink Capital in San Francisco, an investor in early-stage businesses.