Once you’ve got a good idea of whether your business is viable and you’ve analyzed the market, it’s time to draw up a business plan.
What is a business plan?
It’s a detailed analysis of your business, including its objectives, its finances and its marketing. It provides an insight into the purpose and vision for the company and how its goals will be achieved, and sets out the financial requirements for the company as well as its projected earnings potential.
Use business plan as a reference guide, which you can refer to at regular intervals to help you stay on the right lines. Don’t treat it as gospel though – business needs change over time and therefore so will the business plan. If you keep on top of this and amend your plan accordingly, it will help to ensure your business continues in the right direction.
Why should you have a business plan?
There are two main uses for the business plan. The first is as a sales tool to help you present your case to lenders, investors and potential business partners. The second is for your own internal use, as a gauge against which you can measure your company’s development and progress towards its objectives or use it for marketing reasons.
Your business plan therefore needs to be a compelling document that will impress people and convince them of your ability and the viability of your company. To make it credible, you’ll have to back it up with detailed research and accurate financial forecasts. Be careful not to make it flat and lifeless though. Don’t just present the facts and figures – turn them into a meaningful and exciting business case. A word of warning though: keep your feet on the ground at all times and ensure that your analysis is truthful and realistic. Investors and lenders will see right through the hype if you overdo your business plan. Also, it is in nobody’s interest to create a misleading impression. On the other hand, don’t aim too low. Objectives and financial forecasts that seem far too easy and conservative will not impress and will not provide you with any challenge or incentive to reach your company’s full potential.
Make your business plan fair
You need to make your report balanced. Be upfront about both strengths and weaknesses. Put a positive spin on the weaknesses, though – demonstrate what you will do to overcome them.
Your true excitement and confidence in the business will only come across if you write the business plan yourself. It will also help you to develop an even deeper understanding of your business and what you are trying to achieve. There’s no harm in asking experts for help with some of the tricky areas, though, such as the financial projections. It’s also a good idea to get someone to look over your business plan for you after you’ve completed it to make sure it flows, makes sense and forms a coherent whole.
The structure of business plan
A concise synopsis of your company and the plan. This may be the only part of your report that a potential investor or lender will read – they are often inundated with similar reports and documents and can make snap judgements on whether something is worth further consideration based on reading these crucial couple of pages. Always write the summary once you’ve finished your plan to make sure you don’t miss anything out. Make it confident and attention-catching.
Provide some context by outlining what your company is all about. Include the structure of the organization, its history, information on the industry, an analysis of the customer base, a description of the products or services offered. You’ll need to give all the facts to help the reader understand what your company does, but provide more than this. Don’t just describe what your company does, but also what makes it stand out – its benefits and key selling points.
Promotion and sales
Here’s where you should include all of your market research. Show that you fully understand your intended customers and your competitors. Outline how you will deal with competition in the market. Explain your marketing plans for advertising your business and promoting your products and services.
How will your business work? Provide details of where your company will be located, whether it will own or rent its premises, what materials and equipment you will need, what IT and other systems you will use, and who your suppliers will be.
Summarize the figures at the beginning of the section to outline the main messages – numbers and graphs aren’t always easy to interpret. Include costs for every area of your business and do an in-depth projection of the financial outlook for the company for the next year, as well as an outline sketch of the likely financial future over the next five years or so. You should include profit and loss accounts, cash flow, sales projections etc. Also outline how you arrived at these estimates – the reader will want to be reassured that they weren’t just plucked out of thin air. Also, as you’re likely to need to borrow in order to start up your company, your financial analysis should include details of the amount of money you require, how it will be used and where you intend to obtain funding. Think of your business plan as an application form for loans or investors – anyone who is considering backing you will want to see it.
Be clear about where your company is going and what you hope to achieve in the form of solid objectives. As always, objectives should be SMART – specific, measurable, achievable, relevant and time-bound – in order to be meaningful and helpful. The objectives will give a clear indication of how you intend to achieve what you want for your business. To wrap up your plan, you could also include a more general future vision for your company, to give lenders or investors an impression of how your company will shape up and what financial returns they might receive from it.
In this post we had an in depth look on writing a successful business plan. Whether it’s for your business marketing reasons or to show to the investor you should have one. Writing the business plan on itself will raise you a lot of questions and answer to these question will lead you to developing as successful business.
Do you still have questions on writing your business plan? Leave it to the professionals and contact us.