Dropshipping is a growing trend for would-be entrepreneurs. A niche in the market, dropshipping requires careful planning and forethought. Financing the set-up of a business may mean a business loan.
Walking into the bank and asking for a loan won’t work. Banks demand a business plan. It is necessary for the bank to assess the planning going into the business. From the business plan, the bank can determine if the proposal is viable and worth financing.
What is a business plan?
A business plan is a formalized document with several components that present an overall picture of the business. A good plan indicates the steps to be taken to get the business off the ground, secure a place in the market, and make a profit.
Putting effort into writing a good business plan can be the difference between obtaining a loan or being rejected. Rory Williams from assignment writing service says good writing practices make a business plan more effective. “Don’t be afraid to ask for help to make sure your business plan is well-written,” he advises.
How to write a good business plan
There are plenty of templates to use when drawing up a business plan. When applying to a bank for finance, find out if the institution has a set template. Alternatively, consult the United States Small Business Administration website for templates.
Common elements in a business plan
Regardless of the format, there are some elements of a business plan that are common. Pay attention to the following elements to put together a coherent business plan.
1. A brief personal introduction
Start a business plan off with an introduction. The entrepreneur can discuss the skills and education they have which will strengthen the odds of success for the business. Keep this section brief. The reader doesn’t need an autobiography, just some basic details.
2. The overall summary
A summary should be no longer than one page. This page creates an impression by highlighting important information that is elaborated on in the business plan. The executive summary is vitally important. Failure to impress the reader at this stage might affect the chances of plan being taken seriously. Some business leaders suggest writing all the other components of the plan before summarizing them.
3. Describing the company
There are important details in this section. They include:
The proposed name of the business and what products or services it will offer
The location the business will operate from
The legal format the business will take (e.g. a partnership) and the number of employees
Necessary licenses and permits obtained from authorities
Vision and mission statements for the business incorporating its values and ethics
Short-term goals and the steps in the process to achieve the specified long-term goals
A brief description of the industry, where the business will fit into the market, and major competitors.
4. What the business offers
At this stage, go into more detail about the products or services the business will offer. Put a spin on the unique approach the business will bring to the market to stand out from competitors. Dropshippers should go into detail about categories of products and how many products fit into each category.
5. The market as it stands now
A business plan needs to show that market research has been done. A potential business owner needs to know the market well. Show there is a niche in the market the business will fill. Indicate the target group of customers the business aims to reach. Include an analysis of the competitors the business will face. Cite reliable websites or texts used to complete the market analysis.
All parties to the management of the business should submit a brief resumé showing their knowledge, skills, and attributes. Summarize existing resumés to highlight only what is pertinent to the running of the business.
Here, a business needing funding must indicate how much is needed. The plan will show how the money will be spent and what the ROI (return on investment) is expected to be. Realistic indications around repayment of a loan should also be evident. Calculate a projected income trajectory to show the business is worth investing in.
8. Attached documents
Banks will ask for certain documents prior to entertaining a loan application. Credit reports, permits, and patents are some examples. Use this section to include as much relevant documentation as possible.
9. Objective analysis
Round off your business plan with a brutally honest SWOT analysis. Think long and hard about what to write in the analysis. Be objective and realistic. Subjective analysis won’t help in a finance application.
The first draft of a business plan determines if the business is viable before even contemplating finance. Let the plan highlight areas that need further consideration. After addressing such areas, refine the plan to tailor it toward getting a bank to see the business as a reliable investment. Get help to make the plan as professional-looking and organized as possible.