A business plan is a written document that details the current status, projected needs and expected results of the new venture. A business plan at this Start-Up Stage provides a more detailed analysis than the feasibility plan. It is a blueprint for the start-up and growth of the business. Significantly, it is a key document for investors, banks, and venture capitalists.
A good business plan identifies where you are, where you want to be in the future and how to get there.
A business plan outlines the purpose of the business, the talent of the team, the uniqueness of the business concept and an understanding of the needs of the customer.
Below are ten guidelines that should be incorporated into your business plan:
- Have a two – three page executive summary that grabs the attention of the reader. Venture capitalists see hundreds of Business Plans. They view most in less than two minutes!
- Clearly describe the purpose of the business and the customer.
- Show the reader that you have brought together a talented team.
- Show evidence of the acceptance of the product or service in the marketplace.
- Don’t get too involved describing the technical innovations behind this product or service.
- Convince the reader that the business will generate enough cash sooner rather than later to repay loans to potential investors. Also show what funds you need, and how they will be used.
- Don’t spend too long trying to create the perfect business plan. Write a short plan. Treat it as a “living document” that will grow and change with you and your ideas.
- Use clear and concise language. Use a quantitative style (i.e. facts and figures), rather than a qualitative style (i.e. flowery emotive language).
- Demonstrate that your team has the expertise and experience to make this idea work.
- Show that you have put great effort into understanding your customer. Research, research and more research.
A business plan should be structured to include the purpose of the business, results of market analysis, and plans related to marketing, finance, organisation and future growth. There are many models of what goes into a successful business plan, but all variations tend to have the following key elements:
- Cover page – company name, contact person, phone/fax/email, company logo, ABN / ACN.
- Table of contents
- Executive summary – two to three pages in length, divided into the same major section headings as the plan
- Background and purpose
- the business concept (a product, service, innovation, etc)
- purpose of the business
- brief history of the venture, current situation, guiding values
- short-term objectives
- long-term objectives
- Management team
- qualifications and experience of the founders
- Market analysis
- industry size
- growth potential
- geographic locations
- trends in the industry
- profit margins
- Target market
- segment or niche market that will be targeted
- demographics of target markets
- results of initial market research
- market trends
- barriers to entry
- entry strategy and initial market penetration
- direct and indirect
- unique features of your products or services
- sources of competitive advantage
- pricing strategies
- protection of intellectual property
- Development and production plan
- stages in the development of the product or service, time and money at each stage
- potential difficulties
- government approvals required
- quality assurance
- Marketing plan
- target market
- marketing strategy and tools
- marketing budget
- sales forecasts
- Financial plan
If you have an existing business, this should summarise past financial performance using ratios to show profitability and liquidity. If you are a new venture, projected profit/loss statements for the next three to five years, projected cash flow statements, and projected balance sheets for the end of each of the next three to five years should be detailed. Other relevant documentation include;
- Financial strategy
- sources and uses of funds, combination of debt/equity
- dividend or growth plans
- break-even analysis
- systems and procedures to monitor cash flow and use of auditors
- Organisation plan
- philosophy about business structure and culture
- organisational chart
- key positions
- recruitment selection, remuneration and staff retention policies
- ownership and legal form of the business
- Growth and contingency plans
- strategy for growth
- resources for growth
- contingency plan in dealing with problems that may arise with the market or your finances
- Conclusions and implementation schedule
- supporting documents
- additional breakdowns of analyses
Model Plans provide an electronic pro-forma document that guide the preparation of statements of the purpose of the business, findings of the market analysis and a financial review of the prospects for the firm.
Do a search on the Internet using the key words “business planning”. This search will identify a range of commercial products that are available to help you, including sample business plans and models. Also visit your local library for excellent books on writing a business plan. However, a word of warning is that your business, like every business, is unique in some way. A pro-forma business plan can make your business look like every other business to a potential investor. If you use a business planning software package, pick one that allows you to customise your plan. Make sure your personality is expressed in various aspects of the plan.
Updating a business plan occurs numerous times during the growth and development of the business. The business plan is a “living document” that must be visited and re-visited by owners, shareholders and lenders to test and review the performance of the company.
The business plan is a tool that is used by businesses to enhance their chances of success. Like any tool, it needs to be used, and regularly updated and refined.
Some processes for doing this update and review include:
- Regular customer meetings – in which you discuss the quality of the product or service, and the extent to which services need to be improved to meet the targeted needs of customers.
- Visits to suppliers – to discuss strengths and shortcomings in the current supply chain.
- Regular strategic meetings – with key staff, members of a management board or independent consultants to discuss strategies to bring the current activities of the business into better alignment with the goals stated in the business plan.