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Putting together a comprehensive business plan can help you convince your bank to raise vital investment cash. But even if you are putting up the money yourself, creating a business plan will help you keep your feet on the ground and stay focused.
A business plan will also help you spot potential pitfalls before they happen and assist you in structuring the financial side of your business as well. It can also help you to measure your success, as you will have a concrete set of goals and figures written down.
In a climate where banks are tightening their lending rules, a good business plan will also give you the edge on your competitors and help ensure that you come out on top.
So, how do you go about writing a business plan? Many tools and templates are available from banks and business support organisations, and they tend to cover the same fundamentals.
Starting blocks
Firstly, the plan needs a strong executive summary. This is a punchy, high-level overview of your business and is a key element in the business plan. First impressions count and many lenders and investors make judgements about your business based on this section alone.
It needs to cover selected highlights from each of the following sections, so it's worth writing the executive summary after the rest of the business plan because it acts as a synopsis of the key points.
The executive summary should definitely not be a long description of the business and its products, or a boring list of contents that will turn the potential investor off. It should also be free of hype and jargon, as should the plan itself.
The business
Next up in the business plan is a short description of the business opportunity, explaining who you are, what you are selling (or plan to sell or offer in the case of a start up), why and to whom. In this section, you need to set the vision, as well as summarising your business history, key features of the market sector and the product or service and its benefits. Even if the elements of the business are straightforward, it's important to state clearly what the business is and how it works. You should have a lot of this information to hand if you've already researched your chosen market 'niche'.
Also worth covering is an overview of your main competitors and how you plan to develop the business in the future.
The next section should look at your marketing and sales strategy, and you need to communicate why you think people will buy what you want to sell and how you plan to sell it to them.
This section will address questions about how you are going to position your product or service in the market, who your customers are and how you plan to attract new ones. It will also look at your pricing policy and how you plan to promote your product or service.
You also need to describe your sales methods, such as direct marketing, advertising and PR, and talk about how you will reach your customers and the channels you will use to sell to them.
Meet the team
In the next part of the plan, you get to describe your management team and personnel, and cover your own background and credentials, and the people you plan to recruit to work with you.
After this, describe your business' operations and properties, production facilities, and any management information systems and important technology.
Numbers
Finally, you get to the figures. This is the financial forecasts section and it should run for the next three to five years. Make sure you've thought carefully about how much funding you need, what sort of security you can offer lenders, how you plan to repay any borrowings, and sources of revenue and income. The forecasts themselves should include cash-flow statements, profit and loss forecasts, and sales forecasts. The more details the better.
It's worth finding a good template and then jumping straight in. Go for it!
Useful links for further information:
Related information:
Finding a niche in the market - you may think people need your business, but don't rely on gut instincts - research is essential.
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