We’ve been helping organisations to prepare business plans and forecasts for many years. Without exception, it seems like a daunting task for the management team, but it’s really crucial to your success whether starting a new business or wanting to develop an existing business, to have a clear plan and that it can be articulated to the people who can help you make it happen.
“A lack of clarity could put the brakes on any journey to success.”
Steve Maraboli – Behavioral Scientist
Here are our top 10 tips for writing a business plan:
1) Identify your Audience.
When you write a business plan you need to think about who you are going to read it. If you’re writing it for employees and internal stakeholders you’ll need to think about their needs. You may also want to restrict certain information – Do you want your employees knowing areas such as fully detailed financials? – Should you focus on the areas which your employees can influence? Most commonly, we are involved when the focus is aimed at raising finance, meaning that the plan needs to easily provide the kind of information they’ll need in order to assess the potential of your business and positively influence their decision.
2) The Executive summary.
A good book hooks you in with the opening paragraphs, and your Executive Summary needs to draw the reader in, wanting them to know more. The Executive Summary is the most important part of the plan. It comes right at the beginning of the business plan. A common error is wrote the executive summary first, but we always advice that it is written last so that you can summarise the key points from all of the subsequent sections. You should also provide a high level summary of the projected financial performance and, if the purpose of the plan is to raise finance, how much funding is required and what you are planning to use it for. All points should be “punchy” and to the point. You should include information such as strengths and weaknesses; investment criteria; key risks and how they are managed.
3) Know your industry including your competition.
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
An important element of the business plan is showing you are experts in what you do, and that you have a commercial advantage over your competition.. Look at what’s happening in the wider sector that you operate in. What are the opportunities and how do you assess them? Who are your key competitors? This section helps to ensure you have an understanding of what is important to achieving success and any barriers that you are likely to face.
4) Your Market.
It’s key that you research your market and articulate this in your business plan. You may draw on available statistics, or need to produce your own. Consider references to relevant information such as:
– Market size,
– Growth of the sector
This section of the plan should answer one of the key questions – how will you make a profit and how do your margins compare to your competition?
Key to the market are your customers and prospects.
– Who they are?
– Where they are located?
– How sensitive they are to price, quality and service?
5) Product or Service and Branding.
Set out the key features and benefits of your product/service. Put technical details in appendices, but why is what you do/make better than the competition, and how do these benefit the consumer? What is your unique selling point (USP)? The key is that it should be Unique!
6) Your Operations.
What are the key areas of your business operations that give you a competitive advantage, and what are those which potentially hold you back (and how are you going to deal with these). Evaluate the production or service delivery/process; any assets required including the need for premises/investment in production facilities. Can you identify the environmental or legislative risks which affect your business and ahow are they being addressed, or how will you manage?
7) You – “The Management”.
Investors (including employees) back the management team not the businesses idea, so you’ll need to prove the quality of the management both as individuals and as a team. What are your previous achievements/track record and skills? It isn’t “wrong” to identify gaps in the management team, so long as you explain how you plan to address them.
8) Overall Business Strategy.
Be clear and concise on what you want to achieve. Where you are a team, everyone needs to be clear on this and in agreement. The strategy needs to be realistic. Your financial projections need to reflect this strategy.
9) The numbers
Especially if seeking funding or investment, the numbers will be subject to scrutiny. You’ll need to document your key assumptions and explain your thinking behind making these. In addition to the profit and loss account and balance sheet, you should include a cash flow forecast. The cash flow illustrates when money will be spent and received and therefore identify the “pinch points” and where funding may be required.
Don’t worry – we’re not suggesting leaving the planet with a fish bowl on your head!
The plan needs to be reader friendly, so leave plenty of “white space” and consider your formatting, including:
– Section headings
– Page breaks
– Bullet points
– Graphs, charts, tables and pictures
Once you’ve invested the considerable time needed to prepare your plan it’s important that it is revisited regularly. This can help ensure that you keep on the planned track and you don’t stray and that you update and adjust your strategy and aims where appropriate.
A winning business plan helps ensure that your organisation is fully focussed on what it needs to do to achieve your agreed goals. If you are considering writing your own business plan we’d be delighted to speak with you on your particular needs. Please feel free to get in touch to discuss – email firstname.lastname@example.org or call 01904 691141.