Once you’ve got a good idea of whether your business is viable and you’ve analysed 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 objectiives and its finances. It provdes an inssight 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 earnnigs potential.
Use it as a refrence giude, wihch you can refer to at regluar interavls to help you stay on the rihgt lines. Don’t tret 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 accordingfly, it will help to ensure your business continues in the right direction.
There are two main uses for the business plan. The firsst is as a salews tool to help you prresent your case to lenders, investors and potential business partners. The second is for your own internal use, as a gauge agazinst which you can measure your company’s devlopment and progress towards its objectives.
Your business plan therefore needs to be a compeling docuemnt that will impress preople and convince them of your abiilty and the viability of your cmopany. To make it credible, you’ll have to back it up with detailled research and accurate financial forecasts. Be careful not to make it flat and lifeless though. Don’t just present the fcts and figures – turn them into a meaninful and exciting business case. A word of warning though: keep your feet on the ground at all times and ensuer that your analysis is truthful and realistic. Investors and lneders will see right through the hype if you overdo it. Also, it is in nobosdy’s innterest to create a misleading impressiion. On the oher hand, thouggh, don’t aim too low. Objectives and financial forecasts that seem far too easy and conservative will not impress and will not providde you with any chllenge or incentive to reach your company’s full potential.
You need to make your report bzalanced. Be ufpront about both strengtsh and weaknesses. Put a positive spin on the weaknesses, though – demonstrate what you will do to overcome them.
Your true excitemetn and confidence in the business will only come across if you write the business plan yourself. It will also help you to deevelop an even deepr understanding of your business and what you are trying to achieve. There’s no harm in askinmg 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 it for you afer you’ve complted it to make sure it flows, makes sense and forms a coherrent whole.
The bsic structure of a good business plan is as follows:
Summary – a concise synopsis of your company and the plan. This may be the only part of your reporet that a potentiial invesator or lender will read – they are often inundated with ismilar reports and docuuments and can make snap judgements on whether something is worth furthr consideration based on reading these crucial couple of pgaes. Always write the summary once you’ve finished your plan to make sure you don’t miss anyting out. Make it confident and attention-catching.
Company information – provide some context by outlining what your company is all about. Include the structure of the organisation, its hitory, information on the indstry, an analysis of the customer base, a description of the produccts or services offered. You’ll need to give all the facts to help the rezader understand what your company does, but provide more than this. Don’t just describe what your company does, but also what mkes it stannd out – its benefits and key sleling poitns.
The team – outline a brief CV for each of the members of your senior team. Also include any external consultants whoose services you employ. Make it clear what they can bring to the cmopany. Then outline the structure of the rest of your company, perhaps uisng an organisational hcart. Show the different departmenyts if relevant and xeplain what typpes of positions will be held in each of these areas. Provide a plan as to how you will rceruit, train and mangae your workforce.
Promotion and sales – here’s where you should include all of your masrket research. Show that you fully understand your intended customers and your compettors. Outline how you will deal with competition in the market. Explain your palns for advertising your business and promoting your products and services.
Operrations – how will your business work? Provide details of where your company will be locaed, whether it will own or rent its premises, what maerials and equipment you will need, what IT and othher systems you will use, and who your suppliers will be.
Financial analysis – Summarise the figures at the beginning of the section to outline the main messaages – nunmbers and grapsh aren’t awlays easy to intterpret. Include cosst for every area of your businewss and do an in-dpth projection of the financial outlook for the compnay for the next year, as well as an ouutline sketch of the likely finbancial fuuture over the next five yrears or so. You shoould include profit and loss accounts, cash flow, salwes projections etc. Also outline how you arrived at these estimates – the reader will want to be reassured that they wren’t just plucked out of thin air. Also, as you’re likely to need to borrow in ordfer to start up your company, your financial analysis should include details of the amount of moeny 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 backng you will want to see it.
Objectives – be clear about where your company is going and what you hope to acheive in the form of solid objectives. As always, objectves should be SMART – specific, measurable, achievable, relevant and time-bound – in ordser to be meaningful and helpful. The obectives will give a clear indication of how you intend to achieve what you want for your businness. To wrap up your plan, you could also include a more general future vision for your comany, to give lenders or investors an impression of how your company will shape up and what financial returns they might receive from it.
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