Most people who go into businesses
fail to hit the success button because of the improper preparation and lack of
good planning. To eliminate these short-comings, there is need for one to write
a business plan before he eventually goes into its operation.
Detailing your aims, ideas and research by
writing a business plan will greatly boost your chances of success.
What
is a business plan?
Business plans describe your
company, what you're aiming to achieve and how you'll do it. They help you
clarify your ideas, identify potential problems, establish goals and measure
your progress.
They are important in securing
investment, but can also convince your customers and suppliers to support you.
Business plans also provide a realistic assessment as to whether your idea is
worthwhile, making them an essential stage of the start-up process. You should
review and update your plan regularly so it suits the current market situations.
Title
page
This includes the plan's heading and
a brief description as well as the plan's author, the date, and details of
circulation and confidentiality.
Executive
summary
Employed to grab the reader's
attention and entice them to continue, this highlights the plan's key content
and purpose. Executive summaries are usually three or four pages long and
written last. It summarizes your company’s:
- product or service;
- mission statement;
- competitors and market opportunity;
- management structure;
- capital requirements;
- financial projections.
The
business
Here you should address your
company's aims and objectives, converting them into measurable goals. You
should also detail your business's offering, history and ownership structure.
It also briefly describes the
industry and its regulations, individual markets, present outlook and future
possibilities that may exist. Make your competitive edge clear; detail what
your customers will gain from your products or services. Also address how your
business can be developed to meet changing needs of the consumer. Be open about
any weaknesses, as discussing anything that'll negatively affect your business
inspires confidence.
Your
Market analysis
This section includes components
such as:
- Industry analysis and market research - It's vital to know that you've a group of buyers for your products or services. Become familiar with the market, so that the company can be positioned in terms of price and quality.
- Target market - Discuss which market segments you're pursuing, such as local customers or a particular age group. Indicate key characteristics of buyers, plus the size, growth and trends of each segment. Identify also how you'll recognise potential clients.
- Competitive analysis - Summarises your competitor’s strengths and weaknesses, using this information as evidence to define your advantages. Consider also the barriers that can be developed to prevent others from entering your market.
- Existing customers and sales - Mention any customers that you've lined up or sold to. Also address how you'll sell to customers; for example, through phone, online, face-to-face or via an agent.
- Marketing goals - Consider the contribution to profit of each part of your business, if you have more than one product. Examine likely sales, growth, profit margins and costs, outlining any scope for future development.
- Marketing strategy - Address how you'll promote your product; for example, using advertising, direct mail and email.
Management
and operations
This section highlights how your
business functions. You should write in details:
- Management team - Highlight individual’s roles and responsibilities, plus their relevant skills and experiences. You should also mention the financial contributions, salaries and company benefits of each member.
- Capital requirements - Discuss the company's needs in terms of equipment, facilities and personnel.
- Logistics - Detail each division and their assigned tasks, addressing how you'll cover sales, finance, marketing, administration, stock control and quality control. You should also describe the systems and procedures involved in payment and delivery.
- Limitations - Highlight any potential limits to production.
Financial
forecasts
Here you translate everything into
numbers, addressing:
- the estimated costs of starting and running your business;
- any additional finance required;
- sales forecasts for the first year;
- profit and loss forecasts for the first three years;
- cash-flow forecasts, showing that you've considered key variable factors such as sales revenue and wages.
List all of your key assumptions for
each forecast; for example, prices and sales volumes. Small business advisers
and your local business support organisation can help you put together your
forecasts for free.
Risk
management
Consider any risks associated with
running your business, plus the legal obligations surrounding insurance,
licences, and health and safety legislation. Create what-if scenarios, and
document your reaction in the form of backup plans. This will help you to
minimise problems and build your credibility with investors.
Appendices
The appendix organises copies of the
business plan's essential supporting documents. These may include:
- contracts;
- credit history information;
- CVs of the management team;
- detailed cash-flow plans;
- market research information;
- receipts and bank statements;
- tax returns.
Information is always highly confidential,
so tailor your appendix depending on who is viewing your business plan. For
example, potential investors need to know more about your business than
potential affiliates.
