How to Facilitate Business Planning?

Starting a business requires a strategy, a plan and financial forecasts for viability. Each of these tasks requires careful planning and thought.

  1. Develop a business concept. The first step is determining what the business will do. This includes identifying the products or services that the business offers, but it should also include a clear identification of what differentiates the new business from others and what makes it special.
  2. Assess demand for the business. In order for a business to be viable, it must make money and in order to do that, there must be demand for the business’s products or services. Demand for a business can be assessed by surveys and sometimes can be determined by publicly available data, such as that collected by the government.
  3. Determine start-up costs. For many, the initial costs of a new business are sufficiently high to preclude opening the business. Before potential lenders or investors are approached, it is essential that the start-up costs be reasonably accurate. They can have a significant effect on the pro forma financials, which are described in greater detail below.
  4. Identify regulatory and governmental hurdles. Depending on the type of business that you seek to start, there may be licensing or other regulatory requirements that must be met before the business gets started. Generally these can be identified with research on the Internet, but it may be useful to consult an attorney as well.
  5. Create pro forma financials. Before starting a business, and almost always before receiving any small business loans, you must develop financial projections of the viability of the new business. These are called pro forma financial statements. Pro forma financials include projected balance sheets and income and cash flow statements. Generally, the pro forma financials should cover about three years in the future from the business’s launching date.

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