How to Write a Business Plan
We have all heard the old adage ‘failing to plan is planning to fail’. Every business should have a business plan. In essence, it is your roadmap for business success and if done properly can become a living document that projects 3-5 years ahead and outlines what you want to achieve and how you plan to achieve it. A clear and compelling business plan provides you with a roadmap for building a successful enterprise focused on achieving well thought out and defined business goals within defined periods. Indeed, the business plan will help you organise and clarify your business idea and using appropriate information and analysis, you will be able to assess whether the idea is a realistic and feasible business opportunity. Moreover, by preparing a business plan and setting clear mission and goals, you will have a basis in which to measure the progress of your company. Finally, your business plan will also play an essential role in attracting funding into your business from investors and/or lenders. Investors and lenders are unlikely to part with their funds without out a demonstration by you that you have done your research and given careful consideration to how your business will become a commercial success.
How to Structure Your Business Plan?
Preparing a business plan is often left on the long-finger and even avoided because of the perception that it can be time-consuming and difficult to write. This is a miss-conception which often leads to business failure because of no or poor planning. Preparing a business plan is not an entirely painless activity and does take time and effort, however, people tend to make it more complicated than it actually needs to be. While there are many types of business, the basics of a good and sound business plan are standard and widely acceptable.
Here we have summarised the 10 key sections in a business plan:
- Executive summary
This section should be approximately 1-2 pages long and should not be completed until AFTER the rest of the business plan is written. This section provides an outline of the business/project, details the objectives of the business and its future potential (Normally, the executive summary concisely and briefly presents how the plan meets the expectations of the reader). In this section, reference will often be made to the management team, the target market and projections, supported by any research and development and financial data. It will highlight all milestones in the company’s development over the next three to five years. It should sum up the following areas: Purpose of the plan; The market opportunity; Competitive advantage of the business; The Management team; Track record; and Summarised financial projections. In essence, each paragraph should be a summary of the more detailed, related section of the plan.
- Company Description
This section of the plan is relatively straight forward and describes the company: brand name, address, contact details, company registration details. It also describes the management expertise.
- The Business
This section is the opportunity to describe the business in detail in terms of: company history, proposed business model, business vision goals, customer vision and goals, and your management and staffing
- Products & Services
Explain clearly what the product or service is and what it does in plain English (a non-specialist must be able to understand this), emphasizing the product/service’s features, competitive edge or unique selling point.
- Market Analysis
This section covers market research, market trends and competitor analysis, and provides the reader with confidence in the company’s ability to understand its own industry. It is vital that it shows that the business has done the market research to justify the projections made in your business plan. It must also demonstrate that there is a viable market and that the business can beat the competition in the market for sales.
- Marketing & Sales Strategy
This section sets out the company’s strategies for reaching the chosen target market, arousing interest in the product or service, and actually delivering the product or service to them in sales. It should include your marketing strategy, revenue sources, sales strategy, sales pipeline, credit terms and your marketing and communications strategy.
- Research & Development
In this section the nature and extent of any research and development work necessary before a product/service can be marketed is outlined. It may encompass source or product/process development, licensing and/or joint ventures. Any intended future developments of the product/service such as changes to meet future demands or new service development are also detailed here
- Financial Projections
The general rule of thumb is that this section should take up approximately 80% of your time when writing the business plan. This section of the business plan will provide a clear indication of whether the new venture or business plan is viable. If there is historical financial performance data available, the audited accounts will be appended. You will need to show 3 years of projected financial statements and be sure to detail all of the assumptions that you have made in forecasting your revenues and expenses.
- Funding Requirements
In this section the total funding requirements of the business and how those are intended to be provided is outlined. It will also need to state the approximate breakdown of how these funds are to be spent.
- Appendices
This section is used to provide the detailed data on which the main text of the business plan is based, and to provide extra information of interest to the readers of the business plan.
Download our business plan template and start planning for success (Link to business plan template)