It's awesome that you are thinking about starting your own business! You will want to prepare a business plan for any investors - including for bank loans. While I have never started my own business, I have worked as an executive in several start-up businesses, and the information below is what I learned from those experiences. A business plan usually includes information that answers questions like the ones below:
- Describe the product or service.
- What is the need that your product or service is trying to fill or the problem it is going to solve. (For example. "With so many dual income families, people don't have as much time to mow their lawns, and I am seeing a growing need for more lawn services in my city." - OR - "Technology waste is a growing environmental issue. Also it is expensive to replace broken technology. My technology repair business will give people a low cost option to keep their phones/computers working while saving the environment from more trash when they have to throw broken items in the garbage".)
- How is your product different from others already in the market? Who will you be competing with and how will you compete with them? THIS IS VERY IMPORTANT! Any investor needs to know that your company can generate revenues. Think about how you plan to get customers (i.e. what will you do to market your product (flyers? coupons? social media? trade groups?) and what resources will you need to sell (usually telemarketing or people). Your answer may differ depending on if your product will be bought by consumers or other businesses.
- How do you plan to develop/build/deliver it? Will you manufacture in the US or offshore? Do you need a storefront or warehouse, or can you use your garage or living for now? Will you be able to find skilled people to employ or can you easily teach them. Investors will want to know that once you sell your product or service, you can deliver on it.
- Finally, you should put together a financial plan that explains how much money you will need to get started before you even start to generate any revenue (like equipment you might need or expenses to build a website), and then a three year projection for what your revenues and expenses will look like once you start to deliver your product or service. This will help investors understand cash flow and profits. Both of these measures tell your investor how long it is going to take them to get profits from their investment or repayment on the loan.
Kathy recommends the following next steps: