Continued from Marketing Your Product or Service: Business Plan Part Four.
Funding: The Funding section sets forth the amount of funding necessary to start or expand your business. A strong business plan doesn’t merely ask for a fixed amount of money. It sets forth the company’s funding requirements in detail and includes different funding scenarios. It describes how the money will be spent, whether future funding will be necessary and how the current and/or expected future financial condition of the business will accommodate the debt. What does the five year horizon look like? Is the company seeking equity investment or a loan? What terms will best fit with the company’s financial strategy? The funding section should also specifically state how an injection of capital will benefit the company’s bottom line, and should delineate best and worst case scenarios. Tell the prospective investor or lender the company’s long range financial strategies, how profits will be used and what the return on investment will be. In addition, describe precisely how the funds will be used including whether some or all of the funds will be needed to pay off debt or for capital expenditures. Be sure to tie your funding needs to the company’s strategic goals. Lenders want to know that you will be able to repay your debt and investors want to know that there will be a positive return. Show them that the company has a plan to allocate resources efficiently and effectively.
Appendix: The business plan should conclude with an appendix that lists all of the supporting documentation such as: resumes and letters of reference; marketing materials; supporting data for market analyses: licenses, permits, trademarks or patents; leases, contracts, and other legal documentation; corporate, partnership or LLC documentation; and list of professional advisors such as your accountant, business attorney and banker.
For more information on starting up a new business see Starting Your Own Business. If you are considering purchasing an existing business, check out Purchasing an Existing Business Offers Benefits Often Overlooked and Considerations When Purchasing a San Diego Business.