Writing a business plan should clarify your business ideas and define your long term objectives. It should be a straightforward document, plainly written, which describes the business, its strategies, markets and financial forecasts. Writing the plan will help focus on specific aspects of the business and give you an important document to help secure finance and support. This article explains what information to include and how to present your financial forecasts.
The plan needs to include:
• an executive summary - an overview of the business
• a short description of the business opportunity - who you are, what you plan to sell or offer, why and to whom
• your marketing and sales strategy - why you think people will buy what you want to sell and how you plan to sell to them
• your management team and personnel - your credentials and the people you plan to recruit to work with you
• your operations - your premises, production facilities, your management information systems and IT
• financial forecasts
the executive summary
This is crucial. It is the first part anyone will read and is basically a synopsis of the key points of the whole plan. Many judgements about loans, backing etc. are initially made on the basis of this section alone. Keep it interesting and short – no longer than two pages. It should sum up:
• your product or services and its advantages
• your opportunity in the market
• your management team
• your track record to date
• financial projections
• funding requirements and expected returns.
your business, its product and services
This includes an overview of your business:
• when you started or intend to start trading and work carried out to date
• the type of business and the sector it is in
• any relevant history – e.g. experience, if you acquired the business, who owned it originally etc.
• the current legal structure – sole trader, limited company or partnership
• your vision for the future
In this section you should also describe your products or services as simply as possible:
• what makes it stand out from other products or services
• what benefits it offers
• why customers would buy it and what they would gain
• how you plan to develop your products or services
• whether you hold any patents, trademarks or design rights
• the key features of your industry or sector.
markets and competitors
In this section you should define your market, your position in it and outline who your competitors are. Refer to any market research done and show how large the sectors are, important trends and the reasons behind them, key characteristics of buyers and customers you already have.
Key areas to cover include:
• your market - its size, historical data about its development and key current issues
• your target customer base - who they are and how you know they will be interested in your products or services
• your competitors - who they are, how they work and the share of the market they hold. List the advantages and disadvantages of all your competitors and their products
• why will customers come to you
• the future - anticipated changes in the market and how you expect your business and your competitors to react to them.
sales and marketing
This section often gives a good indication of the businesses’ chance of success. It includes:
• how you plan to position your product or service in the market place. Show your prices, quality, response time and after sales service
• who your customers are - details of customers who have shown an interest in your product or service and how you will attract new ones. Quote orders and figures
• how you will promote your product or service, e.g. through direct marketing, websites, advertising, PR, email, ecommerce
• reaching your customers - how you identify them
• selling - by phone, via a website, face-to-face or through retail outlets. How long will each sale take, will you be able to repeat sales?
management and workers
Identify key skills of management and staff:
• define each management role and who will fill it
• show strengths and outline how you will cope with any weaknesses – e.g. through training
• describe background and experience of each member
• describe how you cover key areas of production, sales, marketing, finance and administration
• outline management information systems and procedure - e.g. accounts, sales, stock control and quality control
• outline any external help, mentors or support you may have.
operations
facilities
• what facilities does the business have and how will it deliver the product or service to the customer
• show pros and cons of location, whether owned or rented
• indicate if you need facilities, equipment ormachinery and consider potential limits to production capacity
management - information systems
• have you got established procedures for stock control, management accounts and quality control?
• can they cope with any proposed expansion?
information technology
• strengths and weaknesses, reliability and planned development of systems
financial planning
Forecasts should be for three to five years, with the first 12 months being very detailed. You should include:
• cash flow statements - your cash balance and monthly cash flow patterns for at least the first 12 to 18 months. The aim is to show that your business will have enough working capital to survive so make sure you have considered the key factors such as the timing of sales and salaries
• profit and loss forecast - a statement of the trading position of the business: the level of profit you expect to make, given your projected sales and the costs of providing goods and services and your overheads
• sales forecast - the amount of money you expect to raise from sales
how to present your business plan
Keep it short and professional. Include a cover and a contents page and number all sections. Always start with the executive summary. Edit carefully and get others to read it for sense and mistakes. Anyone should be able to understand it and if there are queries, redraft until it is crystal clear. Get feedback and act on it. Use an appendix for detailed information. Update regularly.
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