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Business Plan: Your Statement of Purpose

You probably already know that there are different steps involved in writing and creating a good business plan. A proper business plan is a valuable tool for your business or company and can help lead you on a path to great success. The more you know about the different components that go into creating one, the better your business plan will be.

One important part of the business plan is your Statement of Purpose. The statement of purpose shows you know what you want and you are willing to do what it takes to get it. These are qualities that are important to a successful business and it shows you are serious about your company and its success.

What is the statement of purpose?

Your statement of purpose is how you communicate with potential lenders or investors, business partners or even future employees. This is an important part of the business plan and should be taken seriously. You need to be direct, concise and to the point. Don’t waste words or will it up with “fluff” here.

The statement of purpose should include exactly what you want without “beating around the bush” or taking a long time to get there. You should be able to get your complete statement of purpose into about a page of your business plan. If your original is longer, keep revising and cutting until you can get it down to about one full page that describes what you want.

What should be included in the statement of purpose?

So what exactly do you say in your statement of purpose? Your statement of purpose should include a brief description of your company or business, your objectives, your company mission and your keys to success. You should describe the primary service or goods provided and your plan to provide those to the consumer as well as the rate at which you will provide it.

You should then include the current local market for your goods or services and where you predict the majority of your profit to come from. You will also include major achievements of the company or details that show why your business has the ability to thrive in the market and be successful.

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Business Plan: Writing the Financial Forecast

When it comes to a business plan, you need a financial forecast. Whether you are trying to seek money from lenders and investors or just looking to plan the business for yourself, you want to see the numbers and you want to project what your profits and losses might be from your business.

Financial Statements

What financial statements do you need to include in your financial forecast? Every business plan should have financial data in it (usually in the back) and this is an important step of the business plan process. You will want to include facts, charts, tables, graphs, formulas and spreadsheets to help represent your financial forecast.

The most common statements to include are the cash flow statement, income statement and balance sheet. These three are interchangeable as they are linked and changes in one will affect the other.

Income Statement

The income statement is pretty simple and self-explanatory. It’s going to describe the proposed cash generating ability of your business. Basically, how much money you project you will be able to earn from your business. You will base your information on the costs of goods, price of your product, revenue, expenses, operating expenses, taxes, profits after taxes, etc.

Cash Flow Statement

Your cash flow statement is very important, especially if you are seeking investments or loans. This statement will explain how much money you need to start up and then maintain your business and keep it running smoothly. You are going to need to put how much money is needed to meet business and company obligations and where this money is going to come from.

Balance Sheet

The balance sheet will use all the information from the other sources to show the information on the company of assets, liabilities and equity. Established companies will want to use a balance sheet for a one year period. New businesses and start-ups may need to adjust this. At the end of the year (or period you are balancing) you will have record of the cash on hand, inventory or product, accounts receivable and your total current assets. There are liabilities, accounts payable, capital and investments and more.

Your balance sheet will basically note where you stand (or predict you will stand) after a specific period of time. If a start-up, you should have a good plan for how to achieve the goals laid out in this financial forecast.

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Business Plan: Writing It For Money

Are you seeking money from lenders or investors for your company or business? If so, then you know that you need a great business plan. Whether you are seeking investments, loans or grants for your business, you need a good business plan to be able to show why your company is worth it and what you have to offer to the business world.

The business plan is a great way for you to set and maintain goals for yourself and the company but it is also a great communication tool for letting potential lenders or investors know about your company. When it comes to business, everyone wants to see a business or company that will be successful. Your business plan needs to show that you know the odds against and for your business succeeding and that you know what to do to turn a profit. When writing a business plan for money, remember the following.

Planning for profits

Are you properly planning for profits? Do you have a good financial forecast in your business plan that includes not only a budget but how the company will work to achieve goals and make profits? Do you have a work outline detailing jobs of employees, payments, other expenses as well as how you compare to other companies in the same market? You need a stable and reliable plan of action to make profits. The successful business doesn’t just sit back and hope the profits come it; it gets out there are makes sure it happens. This is what potential lenders and investors are going to be looking for from your company and your business plan.

The three “C’s”

When a bank or lending institution is considering your business for a loan or investment, they will likely consider the three C’s Character, Credit and Collateral. Does your business plan include proof of these things? Are you showing them why they should invest in you and your company? Are you building the proper confidence needed for someone to give you money? Remember, they don’t want to take a risk with you so if you want to increase your chances of getting money, you need to show that you will be successful and how. They will be sure to bet on what seems to be a “sure thing” over a company that is shaky and unstable.

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