eing able to write a good business plan is an essential skill for any would-be entrepreneur. As well as helping you to clarify your business idea, identify potential problems and set out a way to measure your progress against your business goals, any investors – whether your bank or private funding – will want to see a convincing business plan before investing.
A business plan will have different areas of focus, depending on the industry in which you are operating, the products and services you offer, and the customers and markets you are targeting.
However, there are some elements of your business plan that will remain the same, regardless of the finer details that will affect the success or failure of your business.
This is the short opening few paragraphs that outline the overall positioning of your business. This is where you set out your strategy, explain your objectives, and how you will achieve them. Your executive summary has to work hard – it will be the first (and, if you don’t get it right, possibly the only) thing potential investors read.
Write it – and hone it and then hone it again – after you have pulled together the other elements of your plan.
- What do you do?
- Give details about the history and current status of the business, including the current ownership structure.
- What sets you apart from your competition? What are the USPs of your products/ services? List disadvantages as well as advantages, and include your plans for addressing any disadvantages.
- Explain the key features of the industry; including key players, major trends and changes.
- List key market segments, together with their main characteristics, size, you market share and the market potential.
- What are they key purchase drivers in each market segment, and how does your product/ service meet these drivers?
- Who are your main competitors (both direct and indirect)? Provide honest analysis about how your products/ services compare, including in terms of price, market positioning, distribution, market share, etc. Do they address the same purchase drivers as you?
Marketing and Sales
- How do you currently position your product? Which features do you focus on and why?
- How do you intend to reach the key market segments you are targeting? How does your messaging change per segment?
- Outline your pricing strategy. If possible, show how price sensitive your target customers are.
- Include the key elements of your strategic marketing plan and outline an overview of your marketing tactics. Where possible, outline the costs per sales for the various marketing techniques and channels that you use. If you aren’t already using the channels or marketing techniques, provide realistic estimates of costs and return.
Organization and Management
- Explain how you cover the key areas of your business: production, sales, marketing, finance, customer service, administration.
- Include details of key management personnel (this is especially important for external investors).
- Explain your recruitment, training, retention, development and incentive plans.
- Outline risks, e.g. the loss of a key worker, and how you would deal with them.
- Give details of the systems and processes in place, especially where they deliver competitive advantage. Also list the disadvantages and risks associated with these systems and how you plan to deal with those risks.
- Summarize all available historical financial information, highlighting movement and growth. Include and up-to-date balance sheet and your profit and loss account.
- Outline any capital expenditure and investment, together with your reasons for investing.
- Provide detailed (and realistic) financial and sales projections. Within them, consider “what if” scenarios and their implications for your business and profitability.
A SWOT analysis is a single-page overview of the strengths and weaknesses of your business and the potential risks and opportunities in the market.
- Include the CVs of your senior management team.
- Include details of any IP you own, legal permits possessed, and quality standards you have attained (e.g. ISO 9001).
- Include the detail of the financial results and forecasting you summarized in the section about your financial performance.
- Include your strategic and tactical marketing plans.
- Explain any future funding you will be seeking and why, and the expected returns.
Once you have completed your business plan, it is important not to leave it in a drawer and forget about it. Your business plan should be a living document that you update and refresh on a regular basis.
The business environment changes quickly and only by understanding the risks and opportunities for your business can you ensure the long-term success of your business.
Now you have done the hard work of creating an initial plan, update your plan on an annual basis, so you can use your business plan to develop your thoughts and reflect your growing ambitions as your business grows.
What’s more, the goals and targets you set out at the beginning of your plan should be the standard you hold yourself to; measuring progress against your stated goals.