How to Write a Business Plan
A business plan is a definition of your business, it identifies your goals and illustrates how you are going to achieve them. Focusing how you are going to allocate your resources and provides a detailed framework from which you can make good business decisions knowing the impacts on all aspects of your business.
One of the biggest barriers to the launch of any business is funding and the majority of business plans are made to present your business to financial institutions when you are asking them to support your business when it is starting out. However, once this barrier has been removed the majority of business plans are never looked at again and there is therefore no structure to the businesses development in the critical early stages.
Written correctly your business plan will guide you step by step through your businesses early stages and will focus you onto the correct path when you face the daily issues that will arise. At the bare minimum read it once a week or better still photocopy it and pin it above your desk so that when you are making those decisions you can see exactly what you want to achieve and can slot your actions into the framework to achieve them that you set yourself when you were planning your business. Think of it as a road map to success; however the roads on this map are not fixed and must be adapted and developed as your business evolves.
So how do you write a business plan, well not every business plan will be the same however a great starting point is to structure it using the following headings:
Executive Summary: the highlights of your plan.
When looking for funding it is vitally important that this is as compelling and concise as possible, no more than two pages, as this is what will hook the potential creditor into your business and will make them want to read more to the point that they love your business. Even if you are not intending to use the business plan to gain funding this is still worthwhile putting together as it is a snapshot that can be used to refocus your mind when you are feeling a lack of direction.
Business Summary: Who are you and what does your business do.
This is your Mission Statement and clearly defines what you are in business to do, it should focus onto the business's priorities so that everyone has a common goal to aim for when they read the statement and in essence provides your company vision. This should establish the aims of the business in the short, medium and long term.
Your aims must be prioritised so that it forms a solid foundation for your business and remember that you must be able to quantify these aims and if you cannot measure it how will you know if it has been achieved and more importantly how can you manage your business aims.
Products/Services Offered: What are your products and/or services and how do they align with the marketplace.
This section must clearly define exactly what your business is intending to provide for your customers, remember to include what benefits your customers will receive from your business and its products or services above that they can get from your competitors. This should be sectioned into all the main areas of your business and should be identified as the business revenue streams and be a detailed breakdown of where you can gain competitive advantage in your target market.
Think of your product or service in terms of customer value, if you cannot determine what the value to your customer will be then how are your customers supposed to? A simple way to think of things from a customer's perspective is to think of how your products or services can make money, save money or save time for your customers.
Market Analysis: Typical Customers, Market Size and expected growth.
Your market analysis should focus on the information that you need to help you form a strategy and make business decisions based on a knowledge of your market, you should consider:
Customer numbers, their needs and buying patterns, Prices and market values, Any legal or regulatory considerations, Distribution channels and factors and any competitors in the marketplace and their strengths and weaknesses.
These should provide you with a concise picture of the marketplace and those that you are competing against and should allow you to target the sectors that are available for your business.
Strategy: How you will action your plan and any key points in the business evolution.
This is where your document the mechanics of how you are going to operate. Within this section you will detail a step by step process that takes the overall objective of your business and breaks it down into the composite activities that you will need to carry out to ensure the business is achieving its goals.
Each section should be detailed, including specific responsibilities, timescales and actions to be taken which should obviously include a contingency plan. All should be timed and set out in an easy to follow, and thus manage, manner.
Company Structure: Who your team is and their backgrounds and achievements
More over for the financial institutions benefit so that they can see the calibre of the people that work for your business, including their past achievements adds to their credibility and as such puts the whole business in a more positive light. Also worth while doing so that the key accountabilities are formalised for the entire operation and everyone knows how their role fits in with others.
Financial Plan: Monetary breakdown of sales, cash flow and expected profits.
Very simply this is a spreadsheet that shows all the activities that your business carries out in terms of revenues and costs, hopefully leading to a profit at the end. Sub parts of your business need to be broken down into their component parts and all costs and revenues attributed to them so you can identify any areas for focus. This should also be broken down into a month by month format and details against any revenues what the inputs to achieve this are, for example, number of sales.
In order to write a successful business plan you have a number of options open to you:
Hire a Professional
A professional consultant will create the business plan for you, however you must fully understand the make up and the concepts that form your business idea.
Buy a Book
There are many good books on the market that will help you to understand what needs to go into a good business plan.
Use Business Planning Software
Business planning software provides an outline for your business plan and will fully structure your business plan for you. Basically the software asks you questions relating to your business and then pulls the important aspects together to form your business plan.