[...]... (proverb) A stitch in time saves nine.” (proverb) A What Is a Business Plan? A business plan is a written statement that describes and analyzes your business and gives detailed projections about its future A business plan also covers the financial aspects of starting or expanding your business how much money you need and how you’ll pay it back Writing a business plan is a lot of work So why take the... inconvenience—to reach my goals.” D Reality Check: Banker’s Analysis Banks and institutions that lend money have a lot of knowledge about the success rate of small businesses Bankers are often overly cautious in making loans to small businesses For that very reason it makes sense to study their approach, even though it may seem discouraging at first glance 1 Banker’s Ideal Bankers look for an ideal loan applicant,... service business sells products as an ancillary function For example, a baby diaper cleaning service may also sell diapers and baby accessories Service business customers normally come from repeats and referrals It’s common to have to meet state licensing requirements Hairdressers, carpet cleaners, consultants, housecleaners, accountants, building contractors and architects are examples of service businesses... For example, if you have profitably run a clothing store for an absentee owner for a year or two, a lender may believe you are ready to do it on your own All you need is a good location, a sound business plan and a little capital Then, watch out Neiman-Marcus! Further away from a lender’s ideal is the person who has sound experience managing one type of business, but proposes to start one in a different... businesses •Manufacturing Manufacturers assemble components or process raw materials into products usable by consumers or other businesses This type of business ranges from an artisan who makes craft items to General Motors The most difficult part of the manufacturing business is to find a product, or even better, a series of products, that have acceptance in the marketplace and generate a steady sales volume... typically meets these requirements: •For an existing business, a cash flow sufficient to make the loan payments •For a new business, an owner who has a track record of profitably owning and operating the same sort of business •An owner with a sound, well-thought-out business plan •An owner with financial reserves and personal collateral sufficient to solve the unexpected problems and fluctuations that affect... a plan If your business passes all these steps with flying colors, it means it’s a good idea to write a full business plan; it doesn’t guarantee success On the other hand, if your proposal doesn’t pass, you’ll probably want to modify or change your plans altogether If you’re like most people, chances are your business will pass some tests easily and fail some of the others Antoinette faces just that... require a written business plan before they will consider your proposal seriously Even some landlords require a sound business plan before they will lease you space Before making a commitment to you, they want to see that you have thought through critical issues facing you as a business owner and that you really understand your business They also want to make sure your business has a good chance of... you like your business idea In fact, it’s a danger that threatens almost every potential entrepreneur Precisely because your business idea is yours, you have an emotional attachment to it You should Your belief in your idea will help you wade through all the unavoidable muck and mire that lies between a good idea and a profitable business However, your ego involvement can also entail a loss of perspective... to open and manage your small business You have the responsibility to create bookkeeping and accounting systems and make sure they function adequately (Some suggestions for setting up a system are contained in Chapter 6, Section D.) One of the items generated by your accounting system will be a balance sheet A balance sheet is a snapshot at a particular moment in time that lists the money value of . Small Businesses Appendix 1: Business Plan for a Small Service Business Appendix 2: Business Plan for a Manufacturing Business Appendix 3: Business Plan. business, are familiar with and able to make financial projections and have done the necessary research, you may be able to create a plan in one day. But