For any grant or loan, you will need to write a business plan or proposal. Any lender or grantor will want to know the reasons why they should give or lend you money, thus, they will need to see a business plan. It not only outlines business strategies, planning and forecasting, but it's also an exercise to help the borrower focus on where business is headed. It forces business owners to crystallize opportunities and challenges and make plans to meet objectives and provide for possible contingencies.
In addition, your newly completed business plan can be used as the foundation for a loan proposal to your local banker. Your business plan should be attached to a one-page cover letter that summarizes your loan request. Address this cover letter to your loan officer and briefly cover the five following points:
- Purpose of loan
- Amount required
- Term of loan
- Source of repayment (remember the 4 Cs?)
- Collateral available (again, the 4 Cs)
The Small Business Development Center has free counseling services to give guidance in writing a business plan.
The first and most important step towards starting your business is to develop a detailed business plan. Don't overlook this vital part of starting your business. It will save you time, money and energy in the future. This plan should be carefully thought-out and written down. It should include all of your plans and goals for your business -- financial, personal, location, etc. -- and the steps that you need to take to implement those plans. If you feel your finance or accounting knowledge is not sufficient to prepare these statements, seek professional assistance.
Financing must be planned meticulously to insure success. The business plan is your company's principle sales tool in raising money. Before risking any capital, investors want to assure themselves that you have thought through your plans carefully, that you know what you are doing, and that you can respond effectively to problems and opportunities. They will insist on seeing your business plan before considering any investment, and often will not even meet with entrepreneurs without prior review of it.
A well-written business plan serves as a communication tool, conveying the potential of the company it describes. It should address all major issues, yet not be so detailed that it "turns off" the investor/reader. The business plan must paint a picture for the reader and speak for you in your absence.