Tying together

Tying it all together

A business plan with detailed thought gives an accurate future outlook of your business. The financial information with realistic numbers illustrates whether your business will be profitable or a financial failure a year from now. To ensure your business success, you need to periodically review your business situation, make adjustments, and do continuous innovation. Be sensitive to the changes that take place in the business environment all the time.

 As you do your periodic business reviews, make the necessary adjustment to your marketing plan and operation plan. See Chapter 3 of this book to help you with your business reviews.

Business planning is an ongoing process, not a one-time event. If you actively use your business plan, you will enjoy continuous business success by delivering the right set of quality products or services cost-effectively. Everything you execute reflects a thorough comprehension of customers and competitors. Furthermore, the vital processes that make up the operation are being pro-actively managed and improved.

In the case of Jack’s Sandwich Shop, Jack conducts his business review every three months. The metrics he uses are (1) the number of sandwiches served; and (2) number of repeat online customers, who order online more than once. Jack’s first-year goals were (1) to serve 15,000 sandwiches, and (2) to have 300 customers order online more than once. He uses a line chart to monitor performance trends and a tracker table to monitor progress. Based on the review of the collected data, Jack made necessary course corrections and adjustments to his operation. Jack invited his worker and business partners to discuss and brainstorm solutions to address the deviations that occurred from the original plan. When the shop achieved milestones, Jack gave his employee a gift card as a bonus to recognize efforts in moving Jack’s Sandwich Shop toward his business goal. Jack rewarded the food delivery service provider when that partner exceeds expectations. Jack proactively asked customers for their comments on the sandwich quality and total experiences. Jack regularly monitored the cost-effectiveness of operation, among other performance metrics.

Seeking a business loan from a bank

Bank wants to know if you will be able to repay the loan. Ideal small business loan applicants have much experience running a successful business, sufficient cash flow to make the monthly loan payments, and personal assets. Along with a business plan, your biography explaining prior experience and skill will help. Depending on the loan amount, the bank may check if you have enough personal assets and collateral to make up for the loan if an unexpected event happens. Ensure that your business plan's financial section conveys you have enough cash flow to repay the loan. And your business plan details match the cash flow estimate figures. Write an executive summary of your business plan and include it in the first section of your business plan. Sometimes, a bank loan officer reads only the executive summary before deciding to read the rest of your document or not.

The Executive Summary summarizes all your business ideas on a page. Sketch out your overall business plan to give the bank loan officer an immediate understanding of what you do and why you will succeed. Convey that you have an excellent knowledge of your business and your passion for your business so that the bank loan officer will embrace your enthusiasm. Avoid using industry terminology to make the loan officer able to understand your business plan. Ensure that your financial projection based on your marketing plan, operation plan, and sales forecast illustrates that you will be successful in this endeavor.

The typical executive summary contains the following.

1. Business overview – describe how you will operate and how the business will make money.

2. Product or service – describe what problem you are solving and what you are offering.

3.     Target market – describe the ideal customer profile and how you will reach out and capture them.

4.     Competition – describe other choices customers have to solve their problem and explain what makes customers prefer to buy from you.

5. Business goals – describe what do you expect the business to be in one year, or more.  

6. Financial outlook illustrates how much money you need, how you will use it, month-by-month cash flow, and balance sheet.

If a bank’s loan officer turns you down, do not get discouraged. Although your FICO credit score is one of the decision criteria, each bank's loan officer’s judgment criteria vary. Their decision can be how you and your business plan are perceived by each loan officer. Encourage you to visit 5 or 6 banks in your area until you come across a loan officer who will coach you and help you get a loan.

The SBA (Small Business Administration), a Federal government agency, works with local lenders to provide government-backed guarantee loans to small businesses. A loan guarantee reduces the risk for lenders and makes it easier for them to access capital.

To apply for an SBA loan program, submit the Form 1919 (Borrower Information), the Form 413 (Personal Financial Statement), and the Form 4506-T (Request for Transcript of a Tax return). Anyone with a US citizen or a legal resident alien status is eligible.

Published book

If you prefer to read a printed book version, this is available from Amazon.com.  

https://www.amazon.com/Business-Plan-Small-outlook-business/dp/B08DSX3JBT