Business plans are a crucial part of the formation of any business and play an integral part in the success of the business. However, there is often confusion as to what constitutes such a plan. Often, this confusion stems from the fact that there are so many different types of business plans. This article focuses on a single type of business plan – the business plan for an S corporation.
S corporations are not-for-profit corporations, in most cases. Because of this, most business plans focus on other types of corporations, as well as other states. However, even if the corporation was not created as an S corporation, business plans still need to focus on the process of incorporating. The process of incorporating generally requires that you set forth all of the milestones your company must accomplish throughout the course of the first five years.
The four general methods of financing are usually referred to as growthinks. These methods include working capital options, term loans, sponsor repayment agreements, and bridge loans. Working capital options include merchant cash advances, accounts receivable financing, lines of credit, and vendor credit. Typically, working capital options come with a significant cost attached due to the long terms required for repayment.
A third method of financing is known as the executive summary. This portion of the business plans typically highlights all of the revenue and cost projections for the company. It may also provide a description of management’s strategy and goals for the company over the next three years. The executive summary is extremely important because it serves as the main focus of the business plans and presents the organization in a positive light.
A fourth method of financing is called the marketing plan. This portion of the business plan often includes the various types of advertising methods available to the company, information on the target audience, and other strategies for increasing customer awareness and loyalty. The marketing plan will also detail any direct selling strategies that will be used. The marketing plan is critically important because it outlines new ideas for promoting products or services, new opportunities for customers, and ways to keep existing customers coming back. Tracking the success or failure of these new ideas is vital because it will allow a company to make adjustments to its marketing plan as necessary. Failure to be proactive in tracking results can result in a company missing great opportunities to increase its revenue or drive more customers to purchase its products and services.
The fifth method of financing is called the institutional investor listing. This portion of the business plan normally includes financial statements and an inventory of securities held by the company. Investors may look at these securities through a broker or they may use specialized investment firms to purchase them. Regardless of who the investor is, they are looking to see the company generate enough cash flow to meet their investment goals, so most banks require a formal business plan that provides a good overview of the financial position of the company and includes a business plan analysis detailing cash flow projections, operating expenses, profit and loss forecast, and an exit strategy.