Whilst it is true that a business plan is solely for lenders in traditional funding avenues such as banks to look over, the answer to the question remains the same.
If you are looking to self fund your new business, or to lend funds via a lender, crowdsourcing or angel investor, a business plan isn’t solely for their eyes only. If you still need an answer as to if you need a business pan even if you are self-funding the answer is always yes.
Starting up a new business with no clear path or goals can be an oversight if this is something you fell into. People who turn their hobbies into businesses from home tend to work first and then plan later when it becomes a viable business option. However, if this isn’t you and you are merely walking into a new business blindfolded, it will hamper your progress and leave you open to a wide range of problems from day one.
Why Do You Need a Business Plan?
Where do you see your business in 12 months, two years, five years down the line? How do you plan on getting there and more importantly, how are you going to make your company a success and turn over a profit? If you haven’t taken the time to sit down and think over these questions even if you are self-funding your new venture, then this won’t bode well for your future direction for the business.
A business plan is required by banks and lenders to prove to them you have thought this through and can show that you have the knowledge and understanding of how to run a new company and make a profit.
After all, they will want their investment back somehow and you being able to prove to them that you can make the business profitable to repay what you owe is a requirement.
But self-funding your company means that you are investing all your hard-earned cash into a new company and without a business plan, you could find you are simply throwing away good money and risking losing everything.
How to Write A Business Plan for a Self Funded Business.
Whether you are lending money to start a new company or you are self-funding your new company, writing a business plan is essentially the same thing. Except for showing others how you are going recoup the investment, you are proving to yourself you aren’t throwing away your money.
What Exactly Do You Need in a Business Plan?
The key is in detail. Be as thorough as possible and extensive in your research so you can be honest when it comes to the figures. Not having enough money or not knowing where you should be spending your money can lead to losses and wasted investments that will hamper your progress. As excited as you may be to get your new venture off the ground, the details in the business plan need to be executed as precisely as possible.
As a guide ask yourself the following questions and tailor it to adapt to your specific business;
- How much initial investment will you need?
- Do you need business premises?
- Do you need a shopfront in a prime retail location?
- Is your company easily accessible?
- Do you need staff members?
- What equipment do you need to get up and running?
- How long do you reasonably expect it to take before you start making a profit?
- How do you expect to pay back the initial investment?
- How will you be keeping costs down?
- How long can you run the business without making a profit?
- What is your marketing strategy?
- Will you be renting or purchasing office/retail space and/or equipment?
- What will your monthly expenditure be?
- What is your plan for growth?
- Is there a market for what you are selling?
- Who are your competitors?
- Do you have a Unique Selling Point (USP)?
- How will you capitalise on your USP?
- What are your future growth predictions?
- How will you expand and how long will you be looking at before you plan to expand?
Why A Business Plan is Still Important Even if You Are Self Funding
No one likes to go into a business with their eyes closed. Knowing your costs upfront and being able to direct your funds where they need to be to get your started is vital to get you up and running as soon as possible. If you don’t know what is going on, then no one else will, and before you know it, you are behind schedule and haemorrhaging money.
Take it one step at a time to build the foundations so you can be sure everything is in place as it should be before making the next step in your company. Having a thorough and detailed business plan will help you to do this, and as you set up, you can expand on your points and fill in the blanks as different circumstances present themselves.