What makes a good business plan?

First let’s go over some business plan basics. A business plan should be a realistic view of the expectations and long-term objectives for a new venture. It should provide the framework within which it must operate and, ultimately, succeed or fail.

For entrepreneurs seeking external support such as financing, the plan is the most important sales document they are ever likely to produce, as it could be the key to raising funds.

During a recent lender-training event hosted by SBA, a local participating lender brought up a concern on the quality of a business plan prepared by a local professional that was "SBA qualified."

The discussion quickly focused on the problems some of our participating lenders have been seeing in the quality of start-up business plans. The lender refused, in this case, to either consider the applicant’s plan or take the time to point out the errors – or even contact the small business service provider that helped in the preparation.

From this feedback, we thought it would be of benefit to all Arizona entrepreneurs to identify some of the most common problems seen in business plans from a participating lenders perspective.

Most of these ideas are common and done routinely by professionals in Arizona but it doesn’t hurt to pass them on again. Here are their suggestions:

1. Make sure the accounting or financial columns add up correctly.

2. Make sure you provide ample information and documentation to explain the business and support the loan amount.

3. Make sure the document contains all of the required components of a good business plan.

4. The financial projections should be reviewed by a qualified accountant.

5. Make sure assumptions are documented and justified.

6. Please add a table of contents, appendix for graphs, charts or pictures, and use tabs.

7. Please make sure your plan includes an executive summary.

8. Do not use of home-made

accounting formats for the preparation of financial statements or pro forma work.

9. Do not submit "incomplete" or "see what you think" plans.

10. Make sure the small business owner prepares the plan and can answer any questions posed by an underwriter.

11. Document your ability to manage the business correctly.

You can find a detailed guide to producing a solid business plan on the SBA website – http://www.sba.gov/library/pubs.html#mp-32 . Additionally, SBA’s resource partner’s offer free training and counseling to future entrepreneurs including assistance in business plan preparation. Call SBA’s office for contact information at (602) 745-7200.