Your business plan is vital to establish the structure of your business, its aims and objectives, strategies, products and staffing. It is used to plan and manage your business, apply for funding or show to potential investors. It has ten main parts and these are:
1. Cover and index
Sounds a little silly, but a great cover to your business plan will show the professionalism and care that has gone into its production. It is also the ideal place to include your company logo and contact details. If appropriate, include photos of your products.
Vitally you should also include your company name and number as well as your contact details such as address, website, social media accounts and email and phone number of your relevant director. You will surprised at the number of people that forget this feature.
To help potential investors to navigate around, the index must include all the points of the business plan with the corresponding page number. Make it as complete as possible so that the reader has a clear idea of what the document contains.
However producing the index also gives you, the writer a great planning tool to ensure that you include all the points and information you need to include.
2. Executive summary with the needs and objectives of your business
In the first part of the document you must make a descriptive summary of the idea that includes the following points:
• The opportunity in the market
• The product or service and its advantages
• The management team
• Financial summary the financing needs and expected profitability
By writing the executive summary first, your put all the information down that is in your head. You can always come back to it at the end of your wiring of the main body.
Remember, you need to capture the attention of investors in approximately two pages where you will summarise the most important points of the text. You must also take into account several things:
• Vitally you must define the need or problem that your business intends to solve.
• You need to define the fundamental objectives of the company.
• You need to tell the investor at what stage your company currently is. Whether you are pre-production, starting to expand or in profit for example.
3. Plan out your business
Here is the point where you get your scrap paper out.
• You must describe the mission of your business – that is what you hope to achieve. Then you need a list of actions that your company needs to get to this point.
• Next you need to work out how you will solve the business problems you have identified.
• Now describe what your product or service is, what customers will get with their purchase and what their weaknesses or inconveniences are.
• Discover what price point your potential customers will be comfortable with.
• Lastly you need to discover how you can find these customers.
Often this can all be defined by the use of a business model canvas and this is the subject of another of my articles. You can purchase consultancy to produce this model.
Usually there are already companies that are working for the same goals. Identify them and ask yourself: How am I going to differentiate myself from my competitors?
4. Explain the structure of your business
Making a business plan involves examining the strengths and weaknesses of your competition, once identified you can justify why your business is unique. You must distinguish yourself from the crowd to increase the investment opportunity. That is, refer to the following information:
• Describe what you will be selling to whom and at what price point.
• Introduce your branding concepts – are you going to be a luxury company for example or pile it high and sell it cheap kind of company?
• Describe how you will fulfil an order – in other words, the whole process from purchasing the products yourself to actually delivering them to your customer and offering after service.
• Clarify how you will cover the main areas of production, sales, marketing, finance and administration.
• Include management, sales, stock control and quality control accounts.
• Define how you will sell your products and analyse, if necessary, the location of the company and the advantages and disadvantages of this situation.
Make sure that you solve the following investors’ doubts: What are the products of your competition and how do they create them?
5. List the characteristics of the market in which you will develop your business
You will have to analyse the market conditions: how big it is, how fast it is growing and what its profit potential is. Explain how you are going to investigate your audience and with what tools.
Know the target of the market in which the business will be developed and direct marketing strategies towards that target. If you do not have a working marketing strategy you will lose time, effort and money.
Answer the following question: Where are you going to find your customers?
6. Devise promotional strategies
This is where the marketing plan of your business should be included. It is perhaps one of the most relevant steps when making a business plan. Promotional and marketing strategies could determine the success or failure of your company. Try to answer several questions:
• How are you going to position your product or service? This is where you want the 4 Ps of marketing: Price, Product, Promotion, and Place.
• Compare features such as price, quality and customer service with your competitors.
• How are you going to sell to your customers? Phone, web page, face to face, agents?
• How will you identify potential customers?
• How are you going to promote your business? Advertising, public relations, email marketing, content strategy, social media etc?
• What benefit will each part of your business achieve?
• Why is someone going to abandon your current competitors to buy in your business?
• How are you going to attract them to your company and its products?
• What is a fair estimate of the number of customers you will achieve each year for the first three years?
• What will be your estimate of the cost of attaining each new customer?
• What is the estimate of the cost of retaining each customer?
7. Define your source of income
This is where you put down all the information about what your company will be selling and where the source of income will come from.
• The products and services you will be providing.
• Any advertising fees, commissions, membership fees etc. you will receive.
The analysis should include: price structure, costs, margins and expenses.
Include details of your anticipated cash flow over the first three years. Cash flow is a major consideration. In web based companies it is referred to as the burn rate.
8. Your team
Here is where you wax lyrical about the strength of your directors and major staff. Include their experience in similar posts and what they can do for your fledgling company. Include basis resumes for each of them and state their responsibilities. If you have a particularly renowned supporter, mentor or director here is where you mention it.
9. Your financials
When you reach this point when making your business plan you should start translating everything you have said into numbers. That is, analyse the financial forecasts of your business. Also include your financial strategy – how you will manage your cash flow, vital for any new company. If don’t have a plan, the business could suddenly sink or fail. If, on the other hand, you receive unexpected success, your goals may suddenly change and you will need a new business plan. Therefore, you should assess the risks of your business, identify areas where something could go wrong and explain what you would do in that case. You should include any other investments you have or are going to receive. Details of your share allocations, particularly large percentages, should be included.
9. What you are going to do with the investment
Very importantly, include what you are seeking the financing for and how and when you intend spending the investment. It is vital that the potential investor sees that the company will be vastly improved from the investment.
State how soon and how often the potential investor will see a return for their investment. Also include the offered shares as well as their potential involvement with the company after they have invested.
It is vital that they are offered an exit strategy so that they can have a healthy return on their investment and then move on to the next new company.
10. Annexes
It is very possible that after making the business plan you need to give additional information to complement it. For example:
• Market research data that you have used.
• Resumes of the team that will form your company. This is very important if you are seeking high levels of financing.
• Technical specifications of the product or service (you can include photographs).
• The names of some potential customers.
Creating a business plan involves writing many pages with attractive, dynamic and precise texts that capture the attention of very demanding people. It should attract the attention of investors, who despite having read hundreds of them must find something unique in your business plan.