In today's credit market, if you are trying to raise capital to grow your business you better have a written business plan. A business plan is a document that demonstrates the growth potential and objectives of your company. In addition to serving as a practical road map showing the goal and the path to get there, a business plan should also be viewed as a marketing tool that can successfully sell your business model to capital providers by emphasizing the strengths of your company while still discussing the challenges and obstacles it most overcome.

When you prepare a business plan, pay special attention to following areas:

Executive Summary

I believe this is the most important section of a business plan. Investors and lenders typically read this section first to determine whether or not your vision of the company and its business model are sufficiently creditworthy to warrant further investigation.  

One of the goals in writing an executive summary is to capture the reader's attention. The information in this section should provide a clear summary of the business plan. If your business is complex, you can include more detailed information in later sections of your business plan.  

Your executive summary should be two to three pages long and should include the following information:

• Your vision for your company's
• Your strategy for reaching your goals
• A description of your company's market environment
• What makes your company unique
• Your management team's qualifications
• A description of the types of products or services your company offers
• Key historical and forecasted financial data (generally five years into the future)
• The amount and type of financing you are seeking
• What you'll be using the funds for
• How and when investors will get their money back

Company Analysis

This section expands on the executive summary by describing your business in greater detail. In this section, you will include your mission statement and information about the past, present, and future of your company.

Management and Organization

Your business plan should describe how your company is organized and the responsibilities of each key manager. One of the first questions that providers of capital ask is: Who are the people that are running this company? The information in this section should include:

• Your company's organization chart
• A biographical summary for each of the key managers
• The compensation package for your key managers

Providers of capital will want assurance that the incentives for management are consistent with their own investment goals and are tied to increasing the long-term value of your company.

Marketing Strategies

Growing your business means growing revenues and earnings.  That means that investors will want assurance that the market is large enough to support your business now and in the future, and that you have solid, actionable plans to market your products and services. The information in this section should include:

• Detailed marketing plan
• Product/service positioning
• Data for product/service pricing
• Market research

Competitive Analysis

How does your business compare to the competition? Provide the strategies that give you a distinct advantage, any barriers you can develop to prevent new competitors from entering the market and any weaknesses in your competitor's service or product development cycle that gives you the edge. Remember, an honest appraisal of your competition will lend credibility to your business plan.

Financial Statements

If your company is seeking financing, investors will want to see the balance sheets, income statements, and cash-flow statements for the previous three years.  Your business plan should also include cash-flow, income statements, and balance sheet forecasts for the next 5 years. If significant funds are intended to be invested in capital assets, you should provide a list of your anticipated purchases.

Your forecasts should be prepared using reasonable assumptions that you have documented and tha can be supported.  Do not be overly optimistic; investors look at forecasts to determine whether or not you have a firm grasp of your business and its prospects.  Your assumptions should be consistent with the results of your market analysis and other sections for your business plan.  If the stated assumptions are not supportable or reasonable, you will lose all credibility.

MidCap Advisors is often engaged secure capital for business expansion.  In that capacity we often help business owners either write or edit their business plans. Please contact us if you would to learn how we can help you raise the capital you need.