Before starting any business venture it’s essential to have a strong business plan, but how do you go about putting one together and what should go in it? Well if that question is on your mind, read on…
So how do you go about preparing a business plan?
In broad terms a business plan is a formal statement detailing what your business is aiming to achieve and how it’s going to do it. There is no right or wrong answer for what a business plan should consist of, but if you cover the following points that are relevant to your business, you should be well on the way to formulating your first business plan.
Strangely enough this section should be completed last in your business plan, but it needs to go in the first section. It should include a summary of all the main points in the business plan and most importantly for your investors or your bank manager, the return on their investment or loan repayments, respectively.
If you are seeking funding for your start-up business, you need to decide what type of funding you are looking for, is it from investors that are looking to see a high return on their investment, or are you looking for a bank loan, where they will be more interested in the businesses ability to replay the loan. If you plan to seek finance from investors, be prepared to spend a lot more time on your business plan, especially in areas relating market analysis, strategy, and profit projections. Be warned they will want to see proof of detailed research into these areas.
The business description should include how the company is setup, with regards to its legal status, existing shareholders and directors.
This section should detail exactly what products or services your business is planning on selling and how/why your customers will benefit from your services.
It is important that you understand your target market, who are they, how can you best contact them and where are they located. Depending on the type of business you plan to start-up, will reflect how you market your products of services. If for example you are planning selling a service such as hair dressing you are going to be confined geographically to a specific location, whereas if your business plans to sell web hosting to its customers there are no geographical boundaries, however selling to a global market is going to greatly increase your competition.
Know who your competitors are, what products or services do they offer? Why are your products and services going to be better than your competition? Can you offer better quality, pricing or more flexibility? If you don’t understand your competition you don’t stand a chance!
Strategy & Implementation
Your strategy will be the driving force behind a successful or failure of the business; so this is one of the most important aspects of your business plan, how do you plan to achieve the goals discussed in this document? Be precise about what is going to happen, when it’s going to happen and how much its going to cost.
Show any form of financial history for the business along with your realistic profit projections. Don’t be over optimistic with your profit projections it will only raise concerns with your investors or the bank manager. I’m sure you will have seen how the dragons react to ridiculous profit forecasts in Dragons Den; I certainly wouldn’t want to be on the receiving end of their wrath, would you?
Once you have completed the first draft of your business plan, discuss it with friends, family or work colleagues; get their feedback on it, if they have any negative feedback, treat it as constructive criticism, turn it into something positive. Obtaining backing from investors is highly competitive and your business plan is going to have to stand out from the rest. The same goes for borrowing money from the bank, especially in times of recession, they will only be prepared to loan money to businesses that have a sound business plan that clearly shows they can succeed in their chosen market.
Business plans are not just about obtaining finance for a business, they also allow you to focus on exactly what your business is, what you want it to achieve and how you plan to get there.