A business plan is an integral part of the success of every new business. It is essential if you require funding but even if you don't it will provide a valuable blueprint for you to follow to ensure your new business venture is a success.
Business plans generally follow a standard format. Before you can start to write your plan you will need to clarify your business idea and do the research necessary to complete the following sections.
The title page is as simple as it sounds. Start with the words ìBusiness Plan forî and then add the name of the business. On a new line insert the years the plan covers and on a third line, ìPrepared byî and the name of the preparer.
Table of Contents
A table of contents should be included if your plan is longer than five pages.
This is the most important section of your plan. Readers will read this first, then the financial section. They will only read the other sections if they want more detail. If your plan is less than six pages an executive summary is not required.
The executive summary should contain a summary of your business mission, the market you are targeting, your products or services, your income and profitability and your management team.
Although this is the first section of your business plan it is easiest to write it last as it summarises the rest of the content.
Your mission statement identifies the purpose and goals of your business. In this section you should state your vision for your business and identify what you are selling, where your market is and why you will be successful.
Business Ownership and Address
Often overlooked by first time plan writers this section simply identifies the registered owner(s), address and contact details of the business.
The market analysis section is critical to proving your business idea can be successful. It includes an assessment of the economy as it relates to your business, your target customers and the needs of those customers that will be met.
An assessment of your major competitors, their strengths and the size of the market you are entering must be included to prove that you understand the requirements to enter the market and compete successfully.
Finally you need to include a list and description of your main products and services and your planned marketing methods.
Once the market and your place in it are understood you can compile an analysis of your strengths, weaknesses, opportunities and threats relative to your competitors.
An overall summary of your main areas of focus can be followed by specific strategies for each core product. These strategies should be designed to minimise identified weaknesses and threats and take advantage of your strengths and opportunities.
Your pricing strategy should explain your pricing relative to your competition and how this strategy will operate to give you advantage.
Projected sales by product for each of the next three years should be shown and then further broken down to sales by month in the first twelve months. A graphical representation is a simple and effective way to present these projections.
Structure and Management Team
The ownership structure and management team of the business are essential information for investors. Investors fund people not business plans so they want to know who will be responsible for bringing the plan to life.
Very few sole traders have all the expertise required to cover every aspect of a new business. If you are lacking certain expertise, for example marketing expertise, ask a friend or business associate if they would be willing to act and be named as an adviser to your business.
Include your key actions for the next twelve months for each of your strategies. Use tables to illustrate the timing of actions across the twelve months and provide action statements specifying the cost, the responsible person and deadlines.
Describe your brand, the brand proposition and its personality. Outline your communications program for the next twelve months. Include paid advertising if it is to be used as well as activity to obtain free promotion.
Provide an income statement, cash flow, balance sheet and break even analysis for the next three years and a break down by month for the first twelve months. Outline the capital investment required, the purpose for which it will be used and either a repayment schedule or expected return on investment.
When you have completed these sections you can return to your executive summary to finalise your plan. While writing your plan there are some things you should keep in mind.
Keep your plan as concise as possible. Be sure to include all relevant and required information but most start up plans can be completed in less than twenty pages.
Be realistic; err on the side of conservatism. Put most of your emphasis on the first twelve months as it is critical you have a clear path forward to survive and achieve growth.
Choose your key activities wisely. You will not be able to do everything in the first year. Prioritise to achieve early results then build on these to achieve your ultimate vision in the future.
Assistance is available from industry associations and government bodies. The US Small Business Administration website is an excellent resource for new business owners.
Starting a new business can be an exhilarating experience but to take an idea from thought to reality requires careful planning and ultimately action. A well-written business plan will help you to do both.