If you’re considering a loan to start-up, build or expand your practice, you’ll need to present a thorough business plan as part of the application process. A business plan shows potential lenders you have a well thought-out strategy for building income and profit, giving them the ability to assess risk. The quality of your plan can affect the terms you receive from your bank. But more importantly, a good business plan functions as your roadmap to practice growth, detailing how you expect to succeed and how you will measure that success.
The following are the key elements of an effective business plan. For a more thorough description of how to develop a business plan, visit the U.S. Small Business Administration website at www.sba.gov.
Perhaps the most important section for lending institutions, the goal of the Executive Summary is to convince the reader that you have a viable business proposition. Here you introduce your business strategy and provide a concise summary of your entire plan. You will want to outline your goals and objectives, describe your business operation, and review management and financial highlights.
The Market Analysis describes the conditions in which you will be competing and illustrates there is a market for your services with potential for continued growth. Provide a description of the dental industry today and assess the demand for your offering within your chosen geographical area. Describe your target market including demographics, size of market, local trends and dental service usage. Identify key competitors in the area, including their specialties, share of market, strengths and weaknesses. Use professional research studies if possible.
Describe the nature of your business and the marketplace needs you will satisfy, plus primary factors that you believe will make your business a success. Provide the location and size of your practice, the legal structure of your business, specialty services you will provide, and production level expected. Consider including your pricing structure as well.
Your lender will want to know that you have adequate professional management in place. Provide profiles of your management team and staff, a description of each department and its function, and the salary/benefits package you offer. Show an organization chart if you have one. Include an outline of your ownership structure, with names, percent ownership, and outstanding equity (options to purchase, for example).
Your Marketing Strategy describes how you will attract patients and drive growth for your business. Define the level of growth you expect to achieve per year and outline the strategies for achieving that growth – advertising, a paid referral program, quarterly open house, online advertising, direct mail programs. Detail your channels for growth – for instance, expanding services to children, adding new capabilities, growing production by adding associates.
Service or product
Describe the services you offer and how they benefit your target market, focusing on areas where you have a distinct advantage. Include details regarding suppliers and material costs.
The assumptions made in this section can significantly impact the future success of your project, so consider hiring a financial professional if necessary. Provide three- to five-year financial projections for your practice, including income statements, balance sheets, cash flow projections and capital expenditure budgets. If you have an established practice, also include historical financial data for the past three to five years. Make sure your projections match your funding request.
Describe the amount of funding you will need for your business project, including short-term funding requirements and projected requirements over the next five years. Outline how the funds will be used, how you intend to repay the funds, and terms you want to receive.
Here’s where you will include the back-up information for your business plan, such as market research studies and financial spreadsheets.
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