Writing a business plan is possibly the single most important thing you will when planning your business. It will help you develop your business, dealing with the need for financial projections and budgeting, writing about the aims and objectives of your business along with your business goals and will help to collate not only the evidence that you may need to help support a request for financial assistance from your bank or any investors but to help focus and concentrate your own mind on what you want to achieve and why.
A business plan is a document that summarieis various points about your business, such as:
- Where has your business come from, what was the concept behind starting out
- Where it is at this present time
- Where it will be going in the future and how you intend to get it there
- What financial package you need to achieve your aims
- Why it's different from other businesses which will help you define how likely it is to be successful
- What are the strengths, weaknesses, opportunites and risks that will face your business as it grows
You don't need to write thesis with a million pages - a simple business plan can be a couple of A4 typed sheets of paper but can run to a couple of hundred pages; this really depends on the business, what it wishes to achieve and how it plans to get there. For small businesses starting out, keep it simple. If you get to the stage where you are seeking financial aid from the bank or wishing to apply for enterprise grants, you may need to update your current plan and delve deeper to provide additional details. However, remember that these are busy people so keep it clear and simple.
The key parts of a business plan are:
Text - the details about your business; this will be the bulk of your final document
Evidence - to support any claims you make in your plan.
Financial information - projections and budgets to show that you afford to get where you want your business to go. This will usually include a projected profit & loss account, balance sheet and cash flow statement
Do not underestimate the need for in depth planning - the old phrase "fail to plan, plan to fail" sounds horribly trite but it's very true. Be very truthful about your business, be clear about what you want to do, where you want to go and how you're going to get there. A good business plan will help you in the planning process because to provides a structure for you to investigate each aspect of the business. It will help you:
- To focus your mind and thoughts on the business and provide a structure to include all the information that you might miss out
- To help clarify your thinking - writing out your plan will help you clearly define what it is you really want
- To help you put foward any answers to any arguements that might be questioned by the bank or other funders - it will assist you in anticapting queries and answering them before they've even been asked
- To help you focus on any risks (and any ensuing loss) in your plans - and, conversely, it helps focus on the opportunities and strengths of your business
How to Structure your Plan:
Your business plan should have a structure that allows for easy reading and understanding by the reader. It should include:
1 An Executive Summary - this is a 2 or 3 page summary of the business, your product(s), any opportunities and the company's financial requirements. This is the first part of the report that will be read by any potential investors but the last to be written. It helps summarise all the information and details contained within the body of the report. This is the most important part of your document as it can be the only part read by investors - it's usually this part that helps them decide to read further. It's important to note that most business plans are rejected before the Executive Summary has been fully read so spend time ensuring that you get this right.
2 The Staff - for small businesses, this could amount to one person only but do detail your experience and skills
3 Your Products & Services - what they are and how they are unique from your competitors
4 Your Competitors - who are they and how they could affect your business
5 Your Marketing Strategy - how will you let prospective customers know about your product(s)/services?
6 Your Research & Development Strategy - for the development of new products/services
7 Your Operations Process - purchasing, manufacturing, distribution, customer service, infrastruture
8 Your Financial Details - requirements, project profit & loss information, balance sheet, projected cash flow statements
9 Appendices - any documents or other details that may be of required as evidence of any claims made in your document
Reviewing a Business Plan:Your business plan helps you focus your thoughts about your business, what it is, where it's going, what you want it to achieve, how it will actually achieve what you want and how, and how much all this is going to cost. Because it is such an important document and can take time to write, it is important that you review it fully before your sign off on it.
Ask yourself, does your plan tell the reader:
- Who you are
- What your product/service is and what will your customers pay for it
- Who your customers are
- What your unique selling point is
- What will be the price your customers
- How many products/services can you supply and how many customers will be willing to pay for it?
- What are your delivery and other overhead costs?
- What investment is required for further development of the company?
- And possibly most importantly, is this a viable business?
Remember that your business plan isn't a static document - as we've seen in the last few years, economies change and businesses, in order to be flexible and stay in business, must be able to move with the changes. Therefore, your business plan must a live document - as your business changes, so must your plan in order to remain current and up-to-date. Growth is a live process, your business plan must be also.
Don't forget to check out our next Start Up Sunday feature - Website or No Website?
It's generally seen as one of the most important conversations we will ever have, and to that end, we should strive to make "The Proposal" as memorable as we can.
Whichever way you propose, you have to think about your partner, and the kind of things they love and appreciate.
