The more you know about business plans, the more likely your business is to succeed. Even in this digital age, business plans are still a worthwhile exercise. Writing a business plan will force you to review all aspects of your business at once, bringing you face to face with the realities of your idea. A business plan is a vital tool for the success of your business, as it allows you to:
- Give your business direction
- Identify what roles you need to hire for
- Map out strategies
Not only this, but a business plan is a crucial fundraising tool; banks and investors alike will expect to see one. It will be a requirement when applying for grants and other government supports. You need to know your business inside and out, writing a plan gives you the tools to do so. Below, we have outlined the basic summary of how to construct your business plan.
Although this is the first part of your business plan, it should be written last. The executive summary is only necessary if your plan will be read by someone external to the business. It acts as an overview for the upcoming content of the plan. It should be so comprehensive that your audience could read the summary instead of the full report. You should think about your intended audience when writing this section and be sure to answer everything that they will need to know, for example, if you are applying to a bank then they will want to see an emphasis on financial details. Keep in mind that this is a summary, and so it should be kept as brief as possible while still including the essential information from the other sections. The reader will likely receive hundreds of these plans, so you will want to stand out from your competition.
This section is relatively self-explanatory. It should be a general introduction to your company, its people, and its employees. While it can be tempting to disclose any and all information about your business, it is important that you stick to high-level details. What you need to do in your introduction is express the key characteristics in just a few sentences. You can get a lot of use of this section outside of your business plan which is why it is worth getting right i.e. use this in job specs, bios on your social media, in ads, and on your web site.
Just as the introduction tackles the basics of your business, the market section should describe your market in terms of size, value, history, recent growth trends and anticipated future growth. It is crucial that you do your market research. Be sure to include any competition facing you in the market, what they provide and how they compare to you. Another essential inclusion is the customer profile – demographic, psychographic, and geographic.
This section can be broken down to “The Four P’s” – Product, Price, Place, and Promotion. While some say that the Four P's are outdated, their principles still make up the cornerstone of a marketing strategy, even in a digital age.The section preceding this is a description of the market you’re working in, whereas this section should be used to show that you understand the information provided before. You need to define what you're selling, at what price, from where, and how you're going to get the word out.
Organization and Management
Simply put, section five is a management review with staff requirements included – who is responsible for what and how much they will cost. It is imperative that this section is in line with your market review and strategy, and that both sections are realistic. You should also outline the legal structure of your business - are you a sole trader, a private limited company, or in a partnership? If you are unsure, have a look at Local Enterprise Office's website for an explanation here.
Costing and Finance
This is the crux of the plan, particularly if you are applying for funding. You will require historical finance records, and predictions for the future, and everything in between. Different institutions will have different requirements; for example, Enterprise Ireland expects Key Assumptions, Profit and Loss Accounts, Balance Sheets, and Cashflow Projections. Given the nature of this section, graphs/images may be an easier way to digest the information.
If you are applying for funding, section six will be immediately followed by a funding request which outlines your future needs and current abilities. You should outline exactly how much money you will need and what that money will be used for. It is also critical that you explain your plans for repayment as that is what your creditor will care most about. If you plan any further lending in the next five years, you should also include this for full transparency.
This is where you will include any supporting information you may have, such as CVs, market research, and estimates. It should all back up the account you gave throughout the business plan.
So there you have it, the ABC's of your new business plan. Remember, it is not set in stone, it can be updated as your business grows. Think of it as a fluid blueprint for your company's future success. With a well-written and maintained business plan, you have the means to help you stay focused.