How to write a business plan
Introduction
When starting a new business it's essential to have a workable business plan.
A business plan is the journey you believe your business needs to take to reach its objectives and written as a simple document. This will help you guide your business success and will include activities such as marketing and financial forecasts.
This guide will show you how to prepare a winning high quality plan to secure external funding and help you achieve your business objectives.
Your audience
Although you will probably write your plan for your bank or lender in reality once you have your finance and are going it alone it's then vital you follow the plan you put together.
Obviously things change. The economic conditions may get better or worse or a new competitor comes onto the scene so you'll need to update your plan as you go along. This will then show you how you are going to achieve your original objectives and whether you'll need to advertise more, add new products or more sales staff.
In summary, you should write your plan for yourself more than anyone else.
Your plan contents
Your plan should include all the elements that are going to make your business succeed. In summary you should think about and develop the following:
- An executive summary - summarising where you are now, where you want to be and how you are going to get there. It's an overview of the rest of your plan and the second most important part. Most lenders and investors will read this section and the next:
- Financial forecasts - perhaps the hardest part of any business to get right and understand. If you've seen the TV programme "Dragon's Den" you'll know what most investors are looking for. Overall sales and profit forecasts for the first three years, your cost, selling price and margin of each product and how many you think you are going to sell in units. You'll then be asked how much of a loan or capital injection your business needs and what you are going to spend the money on. Your first 12 months should have more detail than the outlying years and include a cashflow forecast, profit and loss forecast, sales forecast and balance sheet.
- Markets and competitors - you'll need to show how large the market is and the current trends (ie: is it growing or reducing). Detail who the competition is and why they are successful. See what percentage of the market you are going to take from them and what their likely reaction will be when a new entrant comes into their market place.
- Your team - all companies succeed because of the people behind them and your lender will want to understand if it's worth the risk of their money in your business. In essence they are investing in you and your team so have a few paragraphs on each vital member of your team. If it's just you add a one page summary of your skills and achievements.
Starting your plan
It's worth investing a small amount of money to get your business plan right first time rather than spending weeks looking for free stuff or having many meetings with business link. Additionally, if you can't afford to invest £100 or so in a professional business plan then you should seriously think again about developing a business as you'll need a lot more to start up a new business and make it successful.
You can quickly write a business plan using some of the professional business plan companies online. Either use a sample business plan or business plan software to write a business plan.
Presenting your business plan
When it comes to meeting with your lender or investors you are ready to sell your ideas and yourself. Look at it like a job interview. Imagine your lender has no idea about you or your business and they have already seen 10 or so people thinking of starting a new business that day and now it's your turn.
Your plan and presentation should be short and professional. You should have a copy for yourself and take along another 3 or 4 copies for people your are meeting. Even just having a plan prepared will have you ahead of most people.
Avoid any jargon and get some of your friends or family to look over your plan for obvious errors or ommissions. Get them to ask you questions to see if you can answer them.
At your lender present and talk about your executive summary and then ask for any questions. In the unlikely event you get turned down for finance ask why. It might be that you can get a reduced loan or need to add something into your business mix.
Good luck with your business plan and starting up your new business
