Starting a new business can be an exciting adventure, but it can also be incredibly daunting. It’s understandable why many start-ups skip the business plan altogether – who has the time when you’re eager to start making those first few pounds of profit? But here’s the thing: taking the time to understand your aims and your market will save you so much time and energy down the line. Trust me on this one. As the old saying goes, “Fail to plan, plan to fail.” Your business plan is the foundation upon which your success will be built, so don’t overlook it!
Seven top tips for a great business plan:
- Keep to the point and make it succinct – most business plans are far too long;
- Be realistic but challenging when it comes to financial forecasts;
- As well as having the right content, make it look professional;
- Write in plain English – avoid the use of technical terminology or acronyms;
- You may need to refine your business plan as you develop your idea – try to be fluid;
- Make sure your executive summary is consistent with the main body; and
- Back up claims with evidence, such as market research.
What is a business plan and why should I have one?
A business plan is a document that sets out your business aims and objectives. It sets out how you will meet your objectives and is a useful document to refer back to once the business is up and running. If you need to secure funding from a bank or an investor, a solid business plan is a must.
What information should I include in a business plan?
Executive Summary
Are you ready to take your business to the next level? Then, you need a solid business plan that showcases your unique selling point and how you plan to conquer the market. The cherry on top of the cake is the Executive Summary – the section that summarises your entire business plan in a concise yet engaging way, perfect for impressing potential investors or getting a loan from a bank.
But, what makes a great executive summary? Well, you need to highlight the key aspects of your business, such as why your product is better than your competitors and what makes you stand out from the crowd. You also need to explain the market opportunity and how you plan to take advantage of it. Don’t forget to introduce yourself and your team, so that investors can get a sense of who they are dealing with.
Last but not least, you need to include your financial projections, funding requirements, and expected returns. Sounds like a lot of work? Don’t worry, with a bit of effort, you can create an executive summary that will make investors and bankers fall in love with your business idea. So, what are you waiting for? Start writing your executive summary today and take your business to new heights!
Tell Them About Your Company
This section of the business plan is where you get to showcase your industry expertise and explain how your business fits into the market. But, don’t stop there. Tell your potential customers about the benefits that your business will deliver to them. Are you offering something new to the industry or are you competing with established companies? If it’s the latter, what sets you apart? Is it your efficiency, pricing, quality, or something else that makes you stand out?
And finally, if you’re seeking funding, it’s important to explain the proposed structure of your business. Will you operate as a sole trader, a partnership, or a limited company? This information will help investors understand how their money will be used and the potential risks and returns involved.
Your market and competitors
First things first, don’t just talk about the present-day industry scenario in the business plan. Give a brief history of how the industry has evolved, and then talk about your vision for the future. This will not only show your in-depth knowledge of the industry but also help the interviewer or investor understand your unique perspective.
Now, let’s talk about honesty. Honesty is the best policy, always! If you have any weaknesses, don’t be afraid to talk about them. But, make sure to mention how you’re planning to overcome them. This will not only make you look credible but also show that you’re willing to work on yourself to better serve the company.
Moving on, let’s talk segments. Split the industry down into segments and focus on the ones you’re targeting. Explain the trends, demographics, and reasons behind the trends. Oh, and don’t forget to back these explanations up with verified numbers.
Competitors, ah, the elephant in the room. Talk about your competitors, who they are, how long they’ve been in business and their financial position. But, most importantly, talk about their strengths and weaknesses. This will help you understand the gaps in the market and how you can fill them. And don’t forget to mention how you’ll get customers to switch to your company. Trust me; strong brand loyalty can be a tough nut to crack, but it’s not impossible.
Your marketing plan
How are you planning to get your product out there and sell it to potential customers? This part requires you to explain how you’ll acquire your first customers and how it aligns with your financial forecasts. Your marketing plan needs to be clearly outlined since not being able to sell your product means you’ve got no business. A badly thought-out plan will deplete your business funds early on, which could result in cash flow issues and eventual failure.
You need to break down the expected costs of marketing your product and give an estimate of the cost of acquiring a new customer in the plan. Is your industry all about repeat business or do you sell one-off products? Also, how have you fine-tuned your marketing approach to ensure that you’re targeting the right audience.
Moreover, you should explain how you plan to assess your marketing approach to ensure that it’s effective and you’re gaining new customers at a cost that’s profitable. It’s recommended to try a few marketing streams first and focus on the one that yields the most initial traction.
You and your team
In this part, let’s talk about the skills and experience that you and your team have and why they’ll help your business thrive. Don’t forget to highlight the strengths of key team members in the business plan and how those strengths relate to their roles. Also, if there are any gaps or weaknesses, explain them but include ways you’re trying to fill them (like finding a mentor).
Lastly, if you already invested a lot of money or time, make sure to mention it here. That way, the bank manager or investor will see that you’re committed to making your business successful.
Operational plans
It’s important to keep track of the following details related to your business operations:
- Your suppliers and agreements obtained: Keep a log of all the parties that supply you with goods and services and any agreements or contracts you have with them. This information will help you ensure that you receive the necessary supplies and services on time and at the agreed-upon price.
- Production facilities/office space: Note down the locations of all the facilities where you make or store your products and where your employees work. This information will help you plan your logistics and manage your resources more effectively.
- Lead times on production: Keep track of how long it takes to make your products, from start to finish. This information will help you manage your production schedules and ensure that you meet your customers’ expectations.
- Capacity constraints: Understand the limits on how much you can make based on your resources, such as your production equipment, facilities, and workforce. This information will help you plan your growth and expansion strategies.
- Technical expertise: Keep a record of any technical knowledge, expertise, or intellectual property that makes your products unique. This information will help you protect your competitive advantage and prevent others from copying your products.
- Staffing requirements: Understand the number of workers you need to get everything done, including production, logistics, administrative tasks, and customer service. This information will help you plan your recruitment and training programs and manage your labour costs.
Financial Planning
You need to be prepared with a solid financial forecast. Don’t worry, it’s not as complicated as it sounds! All you need is a Profit and Loss (P&L) forecast, a cash flow forecast, and for larger start-ups, a balance sheet.
Your forecast should cover at least the first three to five years of trading. It should be split down by monthly trading figures for the first two years. This way, you can easily track your progress and make any necessary adjustments to your business plan along the way.
The cash flow forecast is especially important because it shows you how much funding you’ll require and when you’ll need it. But don’t forget to build in some contingency just in case things don’t go as planned. A good way to do this is by using sensitivity analysis. For example, what would happen to your cash flow and your funding requirements if your sales were 25% less than your projections?
When building your forecasts, start with sales projections and then work in the cost base afterwards. It’s important to be granular enough to show the expected revenue, costs, and profits for each product type (unless that’s not feasible).
Lastly, make sure you’re clear on the assumptions you used to build your forecasts. Assumptions such as debtor days, creditor days, stock holding, and interest rates on loans. With a solid financial forecast in place, you’ll be better equipped to make informed decisions!
Assessing risks facing the business
A good tool to use here is the SWOT analysis (strengths, weaknesses, opportunities and threats). It will help you to determine the position of the business and think more clearly about the risks that face the business.
Appendix
Put all of the detailed information that backs up your business plan here. For example, your financial model workings, your CV and CVs of key staff, market research. Also, any other material referenced in your business plan.
Wrapping it All Up
To sum it up, creating a kickass business plan is not just some boring formality. It’s a crucial step in your journey as an entrepreneur. Your plan acts as a GPS, helping you navigate your business from the beginning to success. Keep it short, real, and professional while making sure you keep refining it. Remember to cover all aspects of your business, from analysing the market to planning operations, financial projections, and risk assessments. With a well-crafted business plan, you’re not just getting ready for success; you’re actively creating it. Enjoy the process and watch your business idea turn into reality!