These tips could transform your business idea into a source of income
Every entrepreneur dreams of turning their idea into a business. Our country has a great source of talented people who are developing their careers independently. But this road begins with developing a good business plan. We have five pieces of advice that will help you design a plan that will put you on the road to creating your own business.
“A business plan is a living document in which an entrepreneur outlines a business idea. Usually, it is long-term, from three to five years,” explained Vivien Montañez, Senior Vice President and Director of Business Banking. She said the document should include:
- An executive summary: This section should concisely tie together the customer and the idea of the company, its offerings, and the objectives you want to achieve. Additionally, you should outline the business’ competitive advantage and how it is going to succeed. “People like to know there is a passion behind your business,” Montañez said.
- Market analysis: It is important to define clearly the company’s offering and who is the market, how big it is, and what is its growth. Additionally, this section should identify the competition, what they offer and how, and what are the opportunities and threats in the market. This study will lead you to define your competitive advantage, how you are different from the competition, and what percentage of the market you expect to capture.
- Business model: The entrepreneur should explain how he or she is going to execute the business idea, how it will generate income and how it will be promoted to capture the estimated number of customers. This exercise will help to anticipate possible obstacles, identify risks and define operational issues such as hours of operation, organizational structure, and needed resources. “One of the most common errors is that we are too optimistic, that nothing is going to go wrong […] If the bank sees that you are being cautious, that makes us feel more secure when evaluating your business for financing,” she added.
- Team: It is important to be able to find a good working team. In this section, the entrepreneur should identify who will make up the team, what their skills are and how they will contribute to the company’s success. This exercise can help define roles on the team and goals for each of those roles.
- Financial plan: Under this point, the entrepreneur defines the business’ sources of income and operational expenses. This exercise will help the entrepreneur understand the business’ potential earnings, identify the necessary initial investment and how long it will take to recover it. Finally, the entrepreneur will validate the financial viability of the idea.
Once you begin operations, you can use your business plan as a guiding star to evaluate results and see how they compare with your initial expectations. “When you get off track a little and things are not going as planned, you can return to your plan and see where you went wrong. The business plan does not guarantee success, but it defines your vision and strategy,” explained Montañez.
When you request a business loan from your bank, have your business plan ready. Although your personal finances and credit may be good, that is not a sufficient guarantee that you will be able to repay a business loan. For that, you must have a good business plan with objectives and projections that show that your source of repayment for the loan will be capital generated by your business.
The time is now, so don’t put off your decision. Draw up your business plan and put your business idea on the road to success.
Do you want to know how we can help you and your future business? Visit popular.com/en/business-banking/ and learn more. If you want to talk to one of our consultants and receive an orientation to help you get started, access here.