| by Wendell Perkins, Georgia SBDC Think that you don't need a business plan? Consider this brief conversation from Alice in Wonderland: "Would you tell me, please, which way I ought to go from here?"
"That depends a good deal on where you want to get to," said the Cat.
"I don't much care where," said Alice.
"Then it doesn't matter which way you go," said the Cat. Don't be like Alice! The business plan will be one of the most important documents in the life of a business. Just as you would not go to a strange city without a detailed road map, neither would you embark on a business venture without a carefully researched and detailed plan. The business plan is a "road map" which outlines potential clients and customers, a marketing plan, financial plan, proposed budget, etc. It will chart a course for the start-up and development of your business. Additionally, a thoughtful business plan will serve as a proposal for outside financing. The business plan is a written account of the total business concept. After writing the business plan, research to determine the feasibility of your business idea. Key areas include the market potential, competition, business location, management structure, and personnel and financial needs. In all these areas, you will address the "how, why, who, and what." How will you attract and hold market share? Why will your business be profitable? Who exactly is your market? What are your financial needs? Resources to help with this research include the Georgia Small Business Development Center Network. Other resources are libraries, technical schools, chambers of commerce, trade associations, government offices, periodicals, other business owners and, of course, the Internet. One of the most common uses of a business plan is as support for a business loan application. It will provide prospective lenders with all the pertinent information regarding the financial and market feasibility and proposed operation of your business. How is a business plan or loan application evaluated by a lender? A small business loan is a high-risk product for a lender, so he applies a strict credit evaluation. Let's explore the proverbial five C's of the credit process.  Credit.
Credit history should be clean. If you have not seen a copy of your credit report within the past six months, order one. There are three agencies used primarily by the lending community: Equifax 1-800-685-1111, Experian 1-888-397-3742, and TransUnion 1-800-888-4213. Review your credit report at least twice per year.
Capital.
This, also referred to as "cash injection," should be in the area of twenty percent. Collateral.
Collateral offered to secure the loan generally dictates the term of the loan. Generally, the stronger the collateral offered, the longer term the lender will offer. Cash flow.
The business plan should demonstrate sufficient cash flow to repay the loan. Cash flow is demonstrated through historical financial statements or projections. This is also referred to as "capacity." Conditions.
The lender also looks at general economic conditions and at the conditions in the borrower's industry. A healthy economy and a growing industry can improve the chance that the loan will be approved.
Your specific situation will guide the development of the business plan. The more complicated the business proposal, the more complicated your plan will need to be. I often advise clients to remember that the business plan acts as a silent salesman with a prospective lender. Presume that the reader knows nothing about your venture and strive to anticipate all the questions he might ask. Get to know the current lending environment as well as the current business environment. All your research will eventually find its way into your business plan. Don't forget to utilize the resources in your marketplace. Good Luck! To obtain assistance putting together a business plan, contact a consultant at a Small Business Development Center. > For related articles, see: Starting a Business | 
