Kingsley Kobayashi, CEO Kobayashi Group
Writing a business proposal is a critical step for anyone who is starting a business. It will help you make important decisions about your business, the cash flow, needs, marketing, personnel, amount of funding needed, and more.
Of course, each business proposal is different, as it depends on the size of your business, type of industry, and location. However, creating a well-thought-out business proposal will help you set up and grow your business.
When you plan to start a business, you might often have big plans, which might sound great in your head, but soon you realize that they are not realistic. Yes, your plans and goals must be achievable and realistic. You must be honest with yourself when calculating the cost of setting up the operations, running cost, and expected revenue.
Much research goes into writing a good business plan, which will help you understand the challenges and risks. When writing a business plan, always include worst-case scenarios, as is it better to be pleasantly surprised than shocked and be left with no funds. Many new businesses close down early because of this. When looking for an investor, you cannot come back after few months asking for more money. That is unprofessional, and every savvy investor will see the flaws in your proposal and will not invest from the start. So your first task when writing a business proposal is proper research and calculations. Only a well-written proposal will help you secure funding and attract investors. Well researched business proposal shows your potential investors that you take your business seriously and are not just looking for handouts. It will demonstrate your competency and integrity. As an investor, if somebody sends me a lousy business proposal, I do not even bother with the business anymore. If the prospect doesn’t understand the importance of the business plan, they will not be good at running the business, and it is a waste of my time and my funds.
Every business needs structure and clear goals and objectives. Yes, you might have an idea where you want to get with your business, but it’s just an idea until you write it down. Every business needs clear direction to stay in operation. Writing it down will help you understand and adhere to the plan, monitor your performance, and remain accountable. It will also help you identify your weaknesses and strengths because you must understand both to conduct your business and improve where necessary. It will help all your employees to understand your strategy, goals, and values. Everybody who works for you should understand your vision and keep to it. It will also help your investors see where you are going with your company and your long-term plan. Nobody wants to invest in a company that has no direction and no vision.
There is no right or wrong when it comes to writing a business plan, but it should clearly state your needs. You can write either a traditional or lean business plan. Traditional is more common and detailed; lean is focusing on summarizing only the crucial points.
When requesting financing, I suggest you go with Traditional Plan. Include the following sections that make the most sense for your business and its needs
1/ Executive summary – explain what your business is about, your mission, products, or services, why you believe it will be successful, who is on your team, and where your business is located. Include financial information and growth plan.
2/ Business description – include detailed information about your business and what products or services you offer. Be specific and explain what problem you are solving. Remember, people do not buy a product; they buy solutions to their problem. Explain your competitive advantages, why your location is good etc. This section is the part of the business proposal where you can highlight your strengths
3/ Market Analysis – this is where good research comes in. You have to understand your competition, what they are doing, what the trends are. Why will your business work better than your competitors? What can you do better?
4/ Business Structure – describe the legal structure of your business. Are you a sole proprietor, general or limited partnership? Explain it here and if you have management, showcase their experience and the value they bring to the business. If you are a one-man business, explain your expertise. You might even want to include a proper resume.
5/ What service or product are you offering? – This is the part where you describe what you plan to sell, or what service you will be offering, in detail. Explain the benefits for your clients. Are you expecting repeated sales, and why?
6/ Marketing Strategy – explain your marketing strategy and how you plan to evolve and change it. How do you plan to attract customers to try your product for the first time, and how do you plan to keep them. Thoroughly describe your marketing and sales strategies, as this is where the investors see if your business has potential or not.
7/ Funding – outline your funding needs. Clearly explain how much you need and for how long. Are you asking for a loan? Are you offering equity? Give a detailed description of how you will use the funds if you need to purchase the stock, pay for rent, pay salaries, cover running costs, etc. It is essential to include all, so you will not run out of money even before your business takes off. A proper funding plan will show your investor that you know what you are doing. Do not forget to include your strategic financial plan, explaining how you plan to pay off your debts. Every investor wants to know when and how he will get returns on his investments.
8/ Financial Projections – financial projections should be part of your funding request. It will help to convince your potential investor that your business is stable and will be successful. Include prospective outlook for the following years, forecasted income, balance sheets, cash flow statements. Explain your projections and make proper calculations so they match your funding requests.
9/ Appendix – here, you can support your business plan with documents such as credit histories, resumes, recommendation letters, certificates, contracts, etc.
Your business plan is the foundation of your business; it guides you through each stage of your business and works as a roadmap for structuring and growing your company. Take the time to write it correctly, as it will be what your potential investors will be judging you on.
