Applying for funding from banks, venture capitalists, business angels, grant providers or potential partners will, in most cases, require the submission of a business plan. A business plan is crucial for both those intending to start a new business venture or established businesses that want to expand or pursue a new endeavor.
A business plan is essentially a guide to what your business will do, what you aim to achieve, how you will accomplish this and most importantly whether you have the ability to do so. It is of particular importance to new businesses as it is a way to formalize, structure and therefore assess the viability of your ideas.
A business plan provides a complete description of a business, explaining its products or services, marketing and sales strategies, the management team, operations and predictions of financial forecasts. In order to demonstrate the viability of the business idea, you should identify that the product or service has a definite market, outline the advantages in terms of competition, and appraise the costs and profit margins.
The business plan, therefore, enables a business idea to be taken from the initial conception stage towards a fully reasoned and realistic plan of action.
The plan also serves as a working document and essential management tool as it sets out how the business will proceed and the strategies it will employ. It enables possible obstacles to be highlighted and avoided, targets to be focused upon and achieved, and effective structures to be put in place for finances and business strategies.
Businesses should use the plan to guide decision-making and it should be reviewed, modified and developed as the business progresses and evolves. Businesses that implement their business plan and keep it up-to-date are able to monitor their growth and are in a better position to seek out external funding to assist with future developments.
Preparation is The Key
Make sure you set aside plenty of time to complete your plan ensuring you have ample time to devote to each of the sections.
Know Your Market
Your business plan should demonstrate that you know the market inside out and have researched it thoroughly. You must have a clear understanding of your competitors, their potential and the possibility of others entering your market.
Sell Yourself and Your Team
Few investors will part with their money, no matter how credible your plan is if you cannot demonstrate that you have the knowledge, ability and drive to implement everything that you are proposing. Often, a strong management team will be the determining factor in deciding whether to back or buy into a business proposition.
Do Not Underestimate Your Competitors
Do not assume that you can take on your competitors by simply undercutting their prices. Competitors will have the upper hand in terms of market share and will have the ability to make sacrifices and introduce offers that are more attractive for a longer period.
Present your business realistically. When forecasting sales figures aim to convey convincing predictions as business plans with exaggerated and unjustifiable figures will appear less credible. Also, take care not to avoid discussing any risks or problems that may be anticipated. These should be listed alongside strategies and solutions you would employ to resolve them as this will demonstrate that you have thoroughly evaluated your business proposition.
Appreciate the Importance of Your Cash Flow Forecast
This section of the financial forecast is, in many ways, more important than the other sections. Although sales and profits are critical and are often used to determine the success of a business, you will need to demonstrate that the timing of your outgoings is in relation to your incomings. This will ensure that you are able to meet your commitments in order to receive payment, whilst you are still paying suppliers and staff. Basically, you must demonstrate that you will not run out of cash before you become profitable.
Focus on The Opportunity
Above all, a business plan should provide a clear illustration of the exact investment opportunity in terms of how you will exploit it and the ability you and your team have in delivering everything you have proposed.
Impress With Your Executive Summary
Ensure that this section is interesting and will spur investors to read on. Summarize the main points of your business plan so that it provides a complete overview of your business proposition.
Pay Particular Attention to Detail
The presentation of your plan is particularly important and you should ensure that the layout is reader-friendly in terms of font size, line spacing, bold headings and subheadings and include plenty of white spaces to break up your text. Use bullet points to summarize your main points and use charts, photographs, and illustrations, where appropriate. Present your business plan in a book-style format with secured pages that may be turned easily, e.g spiral bound.
Read and Re-Read
Once you are happy with your plan to take extra care to eliminate spelling mistakes and grammatical errors. Once you have read the document a few times, it may be more difficult to spot the errors, so if possible ask someone else to read it, preferably an independent advisor. By doing this, you could also gain valuable feedback in terms of whether it was easy to understand and followed a logical sequence.
Your business plan is probably the most important document you will write for your business. In the first instance, it is a way of assessing the viability of your ideas. By carrying out thorough research of your market and analyzing every aspect of how your business will operate, you can transform your ideas into a workable document and implementation plan for the future.
Ensure that you include dates and budgets where appropriate and that your plan has consistency between the sections, for example, the tasks you outline in your operations plan should be assigned to staff within your management team and personnel section.
Overall, you should tailor your business plan to express and meet the needs of your particular business, pitching it at the audience to which it is intended. You should make use of the resources that are available, and wherever possible, it is a good idea to seek the guidance of a professional.