Posts Tagged ‘Growthink’
Business Plan Advice
Tuesday, July 17th, 2007
It is prudent to avail of business plan advice from known experts than to present a shoddy document that fails to fulfill its purpose. Since the plan will evaluate every aspect of your business, it necessitates detailed knowledge of every facet.
The most commonly given business plan advice relates to its length. All the experts agree that long and cumbersome business plans fail to retain the interest of the readers. The relevant information should be presented in a simple and concise fashion for maximum impact.
Start by identifying the intent and target of your business plan so that the written document can fix concrete goals and devise practical action plans. Seek business plan advice to take care of the problem sections and lend your own experience and knowledge to develop a plan that best reflects your unique style and innate strengths.
The prospective investors closely study the company description segment. Present a glowing, but true account of the management’s special talents and crucial industry experience. Don’t forget to mention your business consultants; the name of a reputed law or accounting firm will instantly shoot up your credibility ratings.
A practical business plan advice mooted by most investment analysts is to seek funding in stages. Once the revenues on initial funding start flowing in, it boosts investor confidence and eases the path of future funding.
Proceed in reverse order; write the first section, i.e. the executive summary, the last. It will be easier to write the summary after completing all the other sections of the business plan since it will highlight their main points and contain investment returns and loan payback details.
The singular most important business plan advice would be to review and edit your business plan closely before submission. Proofread it a number of times to rid it of typos that detract from a professional look. Check for incomplete or unsubstantiated statements to lend it an authentic touch and increase your chances at success.
Article written and copyrighted by Growthink Business Plans . Reprinted with permission.
Tags: advice, business plan, Growthink, Small Business Resources, Starting a Business, startups, tips
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An Entrepreneurs Biggest Cost
Monday, July 9th, 2007
When launching a new product or company, an entrepreneur must consider their biggest cost - the opportunity cost. Opportunity cost is an economic term that is defined as the cost of passing up the next best alternative when making a decision. For instance, if an asset such as capital is used for one purpose, the opportunity cost is the value of the next best purpose for which the asset could have been used. In the entrepreneur’s case, this asset typically includes the entrepreneur’s time and money.
For an individual currently working in a corporate position, the opportunity cost of launching their own venture is typically the financial security that their corporate position affords. Fortunately, this security could be mitigated by attaining funding for the venture and setting the same salary as the prior position. However, if the venture fails, the individual may have lost the opportunity to return to the corporate position and/or does not realize the steps up the corporate ladder that they may have made had they stayed in their prior position. Likewise, if they chose to pursue one entrepreneurial opportunity rather than another, the individual may have lost the opportunity to try to launch the other opportunity.
Opportunity cost is related to the risk/reward tradeoff that is implied in entrepreneurship. The risk/reward tradeoff implies that the higher the risk, the higher the potential reward. Opportunity cost comprises a large part of the "risk" in the risk/reward tradeoff, although it doesn’t include many intangible factors such as potential embarrassment caused by taking capital from friends and family and having the venture fail.
Each entrepreneur has a different opportunity cost such as the amount of their salary should they currently be employed elsewhere. Likewise, companies have different opportunity costs when determining whether to launch new products, services, etc. Identifying the opportunity costs, analyzing them, and then making the optimum decisions is a critical process for entrepreneurs and small and large companies alike, and can be a critical factor in the long-term success of a venture.
Article written and copyrighted by Growthink Business Plans . Reprinted with permission.
Tags: Accounting, business plan, Finance, Finance and Accounting, financial planning, Growthink, loans, Starting a Business, startups
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Alternative Venture Finance: Federal Grants and Loans
Tuesday, July 3rd, 2007
While most companies seeking venture capital initially think about angel investors and venture capitalists, a large alternative source of financing is federal grants and loans. The two largest federal grant programs are run by the Small Business Administration (SBA), and by Small Business Investment Companies (SBICs).
An SBA loan, regardless of whether it is a direct loan from the SBA, or, as is more common, a bank loan guaranteed by the SBA, is essentially a bank loan. The benefit of it versus a traditional bank loan is the rate. SBA rates are typically much less than traditional business loan rates.
In most cases, in a guaranteed SBA bank loan, the SBA guarantees 90 percent of the loan will be repaid to the bank. As such, banks are at much less risk than in most other loans, and are a bit more flexible with regards to who they offer these loans. However, the SBA usually requires the founders of the company to personally guarantee the loans, which makes them risky should the venture collapse.
Alternatively, Small Business Investment Companies (SBICs) are privately organized corporations that are licensed and regulated by the SBA. Small or emerging businesses, which qualify for assistance from the SBIC program, can receive equity capital and/or long-term loans from these companies. Essentially, these companies provide their own capital, which is supplemented by federal funds, to the companies they fund.
Interestingly, U.S. taxpayers benefit from the SBIC program as tax revenues generated from successful SBIC investments have more than covered the cost of the program. Likewise the program has created hundreds of thousands of jobs.
In summary, SBA and SBIC financing are viable alternatives to financing from angel investors and venture capitalists and should be considered in the capital raising process. Similarly to angel and VC financing, companies seeking SBA and SBIC financing need a strong management team and value proposition, and a highly professional and compelling business plan in order to raise the capital they need.
Article written and copyrighted by Growthink Business Plans . Reprinted with permission.
Tags: Accounting, business plan, Finance, Finance and Accounting, Growthink, loans, SBA, SBIC, Starting a Business, venture capital
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What is a Business Plan
Monday, June 25th, 2007
Individuals running small self-owned units with low revenues and lower profits are prone to ask - What is a business plan? They did not grow, simply because they didn’t have one, and never bothered to find out before. Evidently they don’t care much where their business is headed.
Others wish to expand their business but have no idea how to go about it. Ask them what is their business plan and they shake their head, skeptical. Simply wishing will not lead to success. You need to chart down your goals and figure out the way to reach them. This is exactly what a business plan is all about. It guides the enterprise towards stated objectives through carefully chalked tracks and processes, taking into account future conditions and contingencies.
It is your company resume and includes, among others, the following: a current and pro forma balance sheet, a statement of income, and an analysis of cash flow. An enterprising business plan is crucial if you want serious consideration of that important loan application. The plan will contain specific and organized company information and loan repayment method and details. It will also describe the company’s business model and guide your sales team and suppliers.
Your resources may be plentiful today, but only a business plan will help you allocate them wisely. Even with meager means, firms have managed to show record growth, due to careful planning. Good business decisions do not emerge from instant brainwaves; they stem from a predetermined strategy based on detailed financial projections, market forecasts and careful analysis of risks and uncertainties.
The next time someone asks you what is your business plan, be prepared with answers. Tell them a business plan is what helps you stay afloat in bad times and lets you tower ahead of competition in good days. Planning generally pays.
Article written and copyrighted by Growthink Business Plans . Reprinted with permission.
Tags: business plan, entrepreneurs, Growthink, small business, Starting a Business, startups
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