What is a business plan?
A business plan is the blueprint for what your business is going to do and where you want to take it. It defines the market opportunity, identifies what will be special about your business and explains what you intend to do to succeed. A business plan helps:
- Ensure your idea is realistic.
- Planning for business operations, as well as sales and marketing.
- Prepare for obstacles and propose solutions.
- Define your goals and get an idea of the predicted financial return.
- Establish the level of financing you need.
- Persuade potential investors to come on board.
Why are business plans important?
Producing a business plan is an excellent opportunity to think in depth about what you are trying to do. You will set out a strategy for the next few years, with concrete objectives and ideas about how to achieve them. It will give you focus and identify priorities, setting a benchmark for the business once you get started.
It can also be crucial for helping other people understand your business. You will need one to get finance from a bank and/or investors and it may help attract employees and senior management.
5 Tips For Writing a Business Plan
Your business plan should be based on in-depth information, but some of the details should be kept back for marketing or operational plans.
1. Business Plans Should Be Short
Be concise and focus on the need-to-know details. Waffle is not needed in a business plan and could lead to the plan being shelved because it is difficult to work with. It should be well-written with good grammar and no spelling mistakes.
2. Add Detailed Information in an Appendix
If you have more detail for forecasts and assumptions, or strong market research data, you can add this in an appendix. CVs of key personnel can be helpful when seeking outside funding and product literature could be added here as well.
3. Keep It Grounded and Realistic
If your forecasts are over-optimistic, you could end up with big overheads and a subsequent cash flow crisis. Be realistic when trying to sell your business. If you are over-optimistic, it will be transparent to financiers and business partners. You need to protect your own credibility.
4. Business Plans Should Be Professional
Give your business plan a cover and include a contents page for easy navigation. Begin it with an executive summary that outlines key points like the purpose of the plan. If you are able to use charts then do so. Even if the plan is only intended for internal use, write as if it is aimed at someone external.
5. Review Your Business Plan Thoroughly
Read through the plan as if you are the target reader. Check that everything is realistic and backed up with evidence. Assess all the risks and suggest what you would do if a specific obstacle arose. The executive summary is important because it often leads people to make provisional judgements. Try showing the plan to friends and expert advisors to get a frank assessment.
Outlining Your Business and Products
Start by explaining the background of the business. When did trading start and what have you achieved so far? Do you have a personal background in the industry? What is the ownership structure and are there previous owners to mention?
You should also explain your product or service in layman’s terms. And outline the key features of the industry, including special regulations and major technologies.
Identifying Your Market and Competitors
The features of your target market need to be identified. What are the key characteristics of target customers and how big is the market segment? Talk about important trends and the reasons behind them and analyse the outlook for key market segments. If you have existing customers, describe them and their distribution.
At this point, you should outline your competitors. What are the competing products/services and who provides them? How do they compare to you? What makes you stand out from the crowd? Avoid criticising your competitors and don’t underestimate them.
Think About Sales and Marketing
Try to position your product/service on the market and consider the following:
- Assess the quality and the price.
- Does anything make it a ‘specialist’ product?
- List your unique benefits.
- Identify the benefits that are your main focus.
Pricing is important so analyse how price-sensitive your audience is. Identify where your profits will come from and areas with potential to increase margins/sales.
What are your plans for promoting your product? Market segments generally have 1-2 promotional methods that are most effective. You also need to analyse what your sales methods will be and explore associated costs and average sales value.
Outline The Personnel Structure
List the key skills of management and staff covering all areas of business. Uncover weaknesses and say how you will address them. You should compare your workforce numbers and ratios with competitors and explain recruitment and training processes.
Be realistic about your workforce. How committed are they? How would you survive losing key personnel?
Describe Your Business Operations
What are your premises for operations? Do you have production facilities? How modern is the equipment? These are important questions you need to answer in your business plan.
If there is room for improvement, identify what it is. Follow that up with plans to achieve those improvements.
Create Financial Forecasts
Lay out historical financial information for 3-5 years if possible and try to include as many of the following as you can:
- Break the sales figures down.
- Show gross margins for every sales component
- Demonstrate the movement of key working capital
- Highlight where major capital expenditure took place
- Provide a current balance sheet and profit/loss account
You should also provide forecasts for the next 3-5 years. Make them as sophisticated as your business needs them to be and keep the format the same as for the historical information. Any assumptions behind forecasts should be clearly stated and everything should be grounded and realistic.
Add the details for financial forecasts in an appendix. Cash flow forecasts should predict any financing requirements down the line. Seek help with financial data if you need it.
Perform a SWOT Analysis
This demonstrates that you have a profound understanding of your business and what you are facing. It should be a 1-page analysis of Strengths, Weaknesses, Opportunities and Threats. Some examples might include:
- Strengths: Brand name, product quality, experience
- Weaknesses: Lack of finance or small customer base
- Opportunities: Loss of a competitor or increasing demand
- Threats: Economic downturn or the emergence of a new competitor
Be very forthright about weaknesses and threats. Highlight the mitigation and protective factors you are putting in place.
Business plans are extremely important. An honest, well researched and well thought out business plan can give you the best possible chance of success. From understanding your market and competitors, to operations and potential funding, business plans are essential if you’re serious about making your business work.
How Eventura Can Help Your Business Succeed
Eventura have been helping businesses in their digital transformation journey for two decades. From the implementation of industry-leading ERP solutions such as Sage 200 and NetSuite, to helping them move their entire operations to the cloud and away from costly and restrictive on-premise solutions.
As well as being NetSuite Solution Providers, Sage 200 Partners and Microsoft Gold Partners, we also offer a wide range of managed IT services, meaning we can take your business as a whole and help it achieve digital transformation.
If you would like to speak to one of our experts, you can request a free call back here.