A business plan is one of the most crucial stepping stones to get your business to launch successfully. We’ll explain the crucial content of that should be in your plan and provide you with link to business plan template.
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It allows you to have a clear objective of what targets you want to aim for financially. Your plan will most likely be analysed by any possible investors to evaluate how feasible your business is.
Your business plan should consist of 6 main sections at the minimum.
It should contain:
1) an Executive Summary
2) Description of the Business Proposal
3) Marketing and Sales Strategy
4) Management Team
5) Your Operations
6) Financial Forecasts
Before you start writing your business plan, remember to use language tailored to the the target audience you are aim to reach. i.e. whether its for your own purposes or for possible investors. Also the more detailed your plan is, the likelier an investor will part with his hard earned cash.
Explanation for Structures
1) An Executive Summary
Your summary consists of the key points of your entire plan. Hence why it makes sense to write it last. Don’t forget that this is the first page that the reader will reader, so it needs to be informative yet gripping. The length of this summary should be no longer than 2 pages.
2) Description of the Business Proposal
This section conveys; what your vision for your new business is, who you are, what you do, what you can offer to the business, and your target market.
Start with an overview of your business:
- when you started or intend to start trading and the progress and investment you have made to date
- the type of business and the sector it is in
- any relevant history – for example, if you acquired the business, who owned it originally and what they achieved with it
- the current legal structure
- your vision for the future
Then describe your products or services as simply as possible, defining:
- what makes it different
- what benefits it offers
- why customers would buy it from you instead of your competitors
- how you plan to develop your products or services
- whether you hold any patents, trade marks or design registration
- the key features and success factors of your industry or sector
- How do you plan to position your product or service in the market place?
- Who are your customers? Include details of customers who have shown an interest in your product or service and explain how you plan to go about attracting new customers.
- What is your pricing policy? How much will you charge for different customer segments, quantities, etc?
- How will you promote your product or service? Identify your sales process methods, eg direct marketing, advertising, PR, email, e-sales, social marketing.
- How will you reach your customers? What channels will you use? Which partners will be needed in your distribution channels?
- How will you do your selling? Do you have a sales plan? Have you considered which sales method will be the most effective and most appropriate for your market, such as selling by phone, over the internet, face-to-face or through retail outlets? Are your proposed sales methods consistent with your marketing plan? And do you have the right skills to secure the sales you need?
- your market – its size, historical data about its development and key current issues
- your target customer base – who they are and how you know they will be interested in your products or services
- your competitors – who they are, how they work and the share of the market they hold
- the future – anticipated changes in the market and how you expect your business and your competitors to react to them
- Do you have any business property?
- What are your long-term commitments to the property?
- Do you own or rent it?
- What are the advantages and disadvantages of your current location?
Producing your goods and services
- Do you need your own production facilities or would it be cheaper to outsource any manufacturing processes?
- If you do have your own facilities, how modern are they?
- What is the capacity compared with existing and forecasted demand?
- Will any investment be needed?
- Who will be your suppliers?
- Have you got established procedures for stock control, management accounts and quality control?
- Can they cope with any proposed expansion?
- IT is a key factor in most businesses, so include your strengths and weaknesses in this area.
- Outline the reliability and the planned development of your systems.
As part of your plan you will need to provide a set of financial projections which translate what you have said about your business into numbers.
You will need to look carefully at:
- how much capital you need if you are seeking external funding
- the security you can offer lenders
- how you plan to repay any borrowings
- sources of revenue and income
You may also want to include your personal finances as part of the plan at this stage.
Your forecasts should run for the next three (or even five) years and their level of sophistication should reflect the sophistication of your business. However, the first 12 months’ forecasts should have the most detail associated with them.
Include the assumptions behind your projection with your figures, both in terms of costs and revenues so investors can clearly see the thinking behind the numbers.
Your forecasts should include:
- Sales forecast – the amount of money you expect to raise from sales.
- Cash-flow statements – your cash balance and monthly cash-flow patterns for at least the first 12 to 18 months. The aim is to show that your business will have enough working capital to survive so make sure you have considered the key factors such as the timing of sales and salaries.
- Profit and loss forecast – a statement of the trading position of the business: the level of profit you expect to make, given your projected sales and the costs of providing goods and services and your overheads.
Your forecasts should cover a range of scenarios. New businesses often forecast over-optimistic sales and most external readers will take this into account. It is sensible to include subsidiary forecasts based on sales being significantly slower than you are actually predicting, with one for sales starting three months later than expected, and another forecasting a 20 per cent lower level of sales.
Alongside your financial forecasts it is good practice to show that you have reviewed the risks your business could be faced with, and that you have looked at contingencies and insurance to cover these. Risks can include:
- competitor action
- commercial issues – sales, prices, deliveries
- operations – IT, technology or production failure
- staff – skills, availability and costs
- natural disasters – fire or flood