Ask About This Articleyou’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 objectives and its finances. It provides an insight 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 earnings potential.
Use it as a reference guide, which you can refer to at regular
intervals to help you stay on the right lines. Don’t treat 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
accordingly, it will help to ensure your business continues in the
right direction.
There are two main uses for the business plan. The first is as a sales
tool to help you present your case to lenders, investors and potential
business partners. The second is for your own internal use, as a gauge
against which you can measure your company’s development and progress
towards its objectives.
Your business plan therefore needs to be a compelling document that
will impress people and convince them of your ability and the viability
of your company. To make it credible, you’ll have to back it up with
detailed research and accurate financial forecasts. Be careful not to
make it flat and lifeless though. Don’t just present the facts and
figures – turn them into a meaningful and exciting business case. A
word of warning though: keep your feet on the ground at all times and
ensure that your analysis is truthful and realistic. Investors and
lenders will see right through the hype if you overdo it. Also, it is
in nobody’s interest to create a misleading impression. On the other
hand, though, don’t aim too low. Objectives and financial forecasts
that seem far too easy and conservative will not impress and will not
provide you with any challenge or incentive to reach your company’s
full potential.
You need to make your report balanced. Be upfront about both strengths
and weaknesses. Put a positive spin on the weaknesses, though –
demonstrate what you will do to overcome them.
Your true excitement and confidence in the business will only come
across if you write the business plan yourself. It will also help you
to develop an even deeper
understanding of your business and what you are trying to achieve.
There’s no harm in asking 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 after you’ve completed it to
make sure it flows, makes sense and forms a coherent whole.
The basic 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 report that a potential investor or lender will
read – they are often inundated with similar reports and documents and
can make snap judgements on whether something is worth further
consideration based on reading these crucial couple of pages. Always
write the summary once you’ve finished your plan to make sure you don’t
miss anything 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
history, information on the industry, an analysis of the customer base,
a description of the products or services offered. You’ll
need to give all the facts to help the reader understand what your
company does, but provide more than this. Don’t just describe what your
company does, but also what makes it stand out – its benefits and key
selling points.
The team – outline a brief CV for each of the members of your senior
team. Also include any external consultants whose services you employ.
Make it clear what they can bring to the company. Then outline the
structure of the rest of your company, perhaps using an organisational
chart. Show the different departments if relevant and explain what
types of positions will be held in each of these areas. Provide a plan
as to how you will recruit, train and manage your workforce.
Promotion and sales – here’s where you should include all of your
market research. Show that you fully understand your intended customers
and your competitors. Outline how you will deal with competition in the
market. Explain your plans for advertising your business and promoting
your products and services.
Operations – how will your business work? Provide details of where your
company will be located, whether it will own or rent its premises, what
materials and equipment you will need, what IT and other 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 messages – numbers and graphs aren’t always
easy to interpret. Include costs for every area of your business and do
an in-depth projection of the financial outlook for the company for the
next year, as well as an outline sketch of the likely financial future
over the next five years or so. You should include profit and loss
accounts, cash flow, sales projections etc. Also outline how you
arrived at these estimates – the reader will want to be reassured that
they weren’t just plucked out of thin air. Also, as you’re likely to
need to borrow in order to start up your company, your financial
analysis should include details of the amount of money 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 backing you will want to see it.
Objectives – be clear about where your company is going and what you
hope to achieve in the form of solid objectives. As always, objectives
should be SMART – specific, measurable, achievable, relevant and
time-bound – in order to be meaningful and helpful. The objectives will
give a clear indication of how you intend to achieve what you want for
your business. To wrap up your plan, you could also include a more
general future vision for your company, to give lenders or investors an
impression of how your company will shape up and what financial returns
they might receive from it.
Biography:
Author: Benedict Rohan
Website: http://www.mortgagenation.co.uk
Benedict Rohan works as a freelance finance writer. Commercial Mortgage, Homeowner Loans, Remortgages
Tags: earnings, business partners, hype, right direction, sales tool, intervals, insight, investors, viability, lenders, business case, feet on the ground, gauge, detailed research, reference guide
