Anytime someone is looking for capital to buy a business, they present a business plan. Let us break down the elements of a business plan from a real-world perspective. The elements of a business plan include 3 things: A presentation, financial projections, and a narrative.
First Element of a Business Plan: Presentation
Presentations are referred to as "investor presentations" most of the time and are usually created in PowerPoint or something like it. They are a short overview of the business. You want to create something visually exciting that will capture the attention and curiosity of potential investors
Second Element of a Business Plan: Financial Projections
This is the most in-depth part of a business plan. Investors are usually looking for numbers spanning 3-5 years out. There are a number of tools out there like QuickBooks people can use for this. Now, financial projections break down further into 3 elements; There's a profit and loss statement (income statement), a balance sheet, and a cash flow statement.
The profit and loss (P&L) statement will show you if you're losing or earning money. A balance sheet is kind of like a report card that gives you a snapshot of how healthy the business is. The cash flow statement tells you if you're building up cash or bleeding cash. We don't have to tell you if you're "bleeding" anything - it can't be good.
Third Element of a Business Plan: Narrative
The last element of a business plan is the narrative, and it's usually done in a Word document (or something like it). But here's the thing about narratives in the real world; Nobody reads them, except maybe a college professor or... your mom. So, less is more.
Create your business plan in this order. Start with a visually effective presentation to grab and maintain the investor's attention, back up your presentation with solid financials, and finish with a concise narrative.
We hope this was helpful in your journey of becoming a small business owner!
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