A Business plan is like a roadmap, leading you to the success you have always dreamt of. A Business plan is usually prepared by entrepreneurs looking at starting up their own businesses to make their dreams and ideas into a reality.
The document contains a big chunk of information and data (usually ranging from 20-50 pages in length) and is prepared for both the owners benefit and as an information tool for the potential lenders and investors. By developing a great business plan, the author has an opportunity to prove to others that the business has a great potential to succeed.
If you have already done some research into business plans then you will have realised the layout for most business plans is very similar.
Well though-out business plan is a living document that gets updated at least once a quarter.
The recommended headings for a business plan are highlighted below.
A cover page should contain your contact information so that potential investors can easily get in touch with you. You can also make the most of this space to advertise your brand by including your logo and website address.
This is a very crucial section! If it doesn’t grab the interest of the potential investors and lenders, then they won’t read any further! Make sure this section is brief but to the point.
It should include the information on what the business does and describe the need for it in the market. What makes you believe the business would turn out to be successful?
It would also be beneficial to provide some financial data, with the information on how much money you would be looking at borrowing.
This section should contain a short background story (profile) of the company and/or the business idea. A few things to look out for include – the location, history of business formation, stage of the company, any achievements so far, legal structure, the type of business, means of doing business and skills and expertise brought into the business.
Vision and goals
The plan needs to contain carefully selected goals, strategies and needs for the business. What direction do you want your business to go? What are the things that make your business great, interesting and valuable to you, your customers and your business partners?
Describe the different people that will be working for your team. How are you going to ensure you recruit the right people for your business? How many employees will you have? How will you keep your employees engaged?
You could also include relevant information on hiring and personnel policies in this section.
What is the product/service you are going to sell? How is it going to be different to what is already available in the market?
How will it evolve in response to customer feedback, market changes and competitors?
What is the current market size? How is it changing (growing/declining)? What trends are affecting the market? You could include a PEST (Political, Economical, Social and Technological) analysis model here to further highlight all of the external factors which could have an impact on your new business.
In order to succeed it is very important to acknowledge the competition.
Who are your competitors? What are their key strengths and weaknesses? How is your product/service different to the ones they provide?
What gives you the competitive advantage in the market? What do you need to do to achieve that?
What approaches are you going to use when communicating the benefits and features of your products/services? How are you going to approach your customers, including demographic information (age, gender, income and others), psychographics (customer values, lifestyles, habits and interests). This will give you a deeper understanding of the customers’ needs, wants and frustrations. This again will help you create products and services to meet the needs of your target customers. How will you develop a customer relationship management (CRM) strategy and what will it consist of?
What promotional tactics and marketing channels are you going to use and when?
What will your pricing strategy be?
You should develop and include your marketing communication plan, including your social media strategy.
What are the milestones you want to achieve in order to get where you want to be? What is your company going to look like in the 12 months, 3 years and 5 years?
Finance and Funding
This is the right time to provide all the necessary data, such as predicted turnover, profit, customer numbers, expenses and others for the next 3 to 5 years. Make this as realistic as possible. You have to be reasonable and understand that most of the time you won’t be able to make a massive profit in your first year. Make it clear for the investors to demonstrate and give them confidence in your understanding of the financial elements of the business.
What is your current budget? How are you planning to pay for it all? How much money would you require from your investors? In what areas will the funds be invested? What could the investors expect in return?
What are the expected revenues and profits for the company in the next few years? What assets must you acquire in order to grow your business?
What personal methods of compensation do you have in place?
Remember that investors and lenders want collateral, cash flow and guarantees. They want to see how long it will take for you to make a profit and pay the money back.
How will you manage the stock control?
How will you maintain accounting records and procedures / what financial system will you be using and will this system be integrated into other business applications such CRM?
How will you measure the performance of your company? This will normally have more than one metrics such as; value per sale, number of customers, number of new customers, website or physical visitor, number of enquiries and many more.
This is the last thing that the owners of a start-up company want to talk about, however everyone needs an exit strategy.
What are you going to do if your business turns out to be a failure? Would you sell or would you change the business direction?
A careful plan of the different options could offer you a great help if the worst came to worst but the most important part of an exit strategy is it will help you to identify if the business is going in the wrong direction so you can put steps in place from an early stage to avoid failure early on. Equally, an exit strategy can show investors you have ambition to sell the company on when it is doing well.
Use this section to support your business plan, by including your full financial projections, projected income statements, balance sheets and cash flow statements.
You could also include any other useful documents, such as patent information etc.
Don’t be tough on yourself if the business plan doesn’t work out the way you wanted it to. You will notice yourself making changes throughout the process of bringing your business idea into life.
It is alright if it takes you a few attempts to develop a great business plan. It takes practise so take it easy.