So What Makes a Great Business Plan?

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A business plan is usually required for any new business that is looking to start up and is looking for some kind of funding, be it bank overdrafts, loans, mortgages, grant funding etc. It is also necessary when looking for larger funding to expand a business, and perhaps to acquire equity investment. There are many sources on the internet that will cover a mass of detail that should be included in a business plan, a one-size fit’s all plan if you like. As a template and source of ideas this is okay, but rule number one in producing a business plan is “tailor it not only to your audience, but to your specific business and how you will achieve the goals in the plan”.

Too many plans revolve around what the target audience wants: “What do we need to say, and how do we need to say it to get our hands on those funds?”, this can be a major mistake and may well backfire on you. Sure, you want the funds but not at any cost. Imagine you suit the plan to the reader’s needs and then fail to hit targets in 3 months time, knowing that you couldn’t have met them anyway but needed the funding, what then? Understand what the funder wants from you, and make sure that you include all of the relevant core detail they need to help make a decision. But use your business plan as two things, a tool to manage your business ongoing and to help meet those targets you are setting, and as a marketing document that sells your business idea and strengths to your audience. You may only get one chance, make it count first time, every time!

A business plan is like a story. It has a start, middle and end. It has a plot, that needs to unfold in front of the reader’s eyes, taking them on a journey that throws up a host of challenges and shows them how the characters can overcome, and succeed! There is always a happy ending in a business plan, but along the way there are real terrors and dangers which the reader needs to be convinced can be conquered, and at the end they are confident the main characters are the one’s to do it! It is not a cold and mathematical document…bring it to life, make it real. If it looks and feels real, then with hard work and the right people it can become real.

The main components of a business plan, and the key way to approach them, should be:

1. An executive summary:  This is where you set the scene and outline the ‘plot’ of your business plan, where you bring the characters to life. Explain why your product or service is so good, why it is unique or better than the next best thing. Tell the reader who the characters are, what makes them so experienced and special that they have the mental and technical skills to make the plan work. Build the confidence, build the belief. Present the figures for cash flow and profit and loss, do it graphically and include a second graph to show a ‘what if’ scenario. Let the reader know you have thought about slow sales, slow cash collection, cost increases, and that even in the worst case this is how you are going to see a return on your money!

2. Aims and objectives: Let the reader know what makes you tick, why you are wanting to do this and what you want from it, not just financial. That helps build the confidence in your drive and resilience, but also shows how much you’ve thought about things. The action points in your plan should also drive you down the route towards achieving these aims.

3. Business description: This is a bit more methodical in that you need to describe what you will be doing, but give it a warm feeling that shows your passion for what you do. Tell them what makes your business different, and how you plan to differentiate yourself. Include a small section here on regulations and licenses here if they apply, this makes sure you have factored in costs and ticked the legal boxes.

4. Managing your business: You need to let people know that you have everything in control, that you can manage every bit of your business and if you don’t have the resource then your plan explains how you will acquire it. Split it into easy sections covering finance and accounts, marketing, sales, HR, administration, health and safety etc.

5. Customers and the market: To get confidence in your plan you need to do your homework and not just about the key players in your target market. You need to show you understand them, what drives them, what their aims are and how you can satisfy them. How will you persuade them that your product is better? A thorough understanding of the competition is key too. Who are they and what are their strengths and weaknesses, and those of their products? How are you going to overtake them, can you add value to an existing product, or release something that complements it? How will you differentiate and catch the eye of the customer? Show the reader that you have tirelessly done your research, and that you have those entrepreneurial skills to better your competition.

6. Marketing plan: Include your strategy for marketing, and how you will gain access to your planned customer base with what methods. Describe your approach, who will be doing it, the timescale for enacting the plan. If you lack marketing experience look at grant-funded consultancy to bridge the gap.

7. Sales plan: How many units are you going to sell to whom? What services are being purchased from your business? Are the sales one-off or recurring, where will new customers fall into your plan, what are the prices and who is driving your sales effort? These all need to be answered, but make your business plan stand out by not making it matter of fact statements. Write it like a diary almost, tell the reader what you will do on what day or week or month, how you will do it, who will do it…it’s like a bulleted action plan of sales achievement. Include a section on courses of action if your plan slows down or customers are not won. Sensitize the sales line to prove you are also a realist, but that you have a backup plan.

8. Operations: Every plan should cover the things you will need to operate effectively. These can include staff, offices, factory units, storage buildings, capital equipment, licenses and authorisations, statutory requirements like rates and insurances, suppliers for you processes, distribution centres, vehicles etc etc. There’s generally nothing sexy about the operations side of a business but think of it as the engineroom on a ship. If it doesn’t work, the passengers are going nowhere. Explain how each area is covered in your plan, and how you and your team will use their skills and drive to make it as efficient as it can possibly be.

9. Financial forecasts: It is worth having this done professionally, or at least audited by a professional. The profit and loss is important but even more so is the cash flow forecast.  The timing of purchases and collections from debtors can seriously impact on your cash requirement. Take time to ensure you have made realistic assumptions and also to do some sensitivity on it. What if you have a major breakdown and need to find £2,000 up front, what if your debtors slow down from 30 days payment to 60 days, what if your energy bills go up by 15%? All of these examples hit your cash flow, meaning your nicely prepared cash flow forecast that said you could manage in 6 months time has been blown out of the water. Be realistic, have a plan that lets the reader see what your contingency is.

10. Business Risks & SWOT Analysis: Not every plan includes these but it is worth including them to ensure the reader sees you have covered all of the bases, and put ideas at least in place to combat any potential risks. A good SWOT analysis shows that you are a realist who understands that your business plan isn’t based on you thinking you are perfect, or that threats do not exist from day one.

So make your business plan come to life as it is being read. Make it clear and concise where appropriate, and always be thinking of a ‘what if’ situation in every part of the plan…after all, the reader will be. If you answer the question before it can be asked, that’s the best way to convincing your audience that you are serious, realistic and can adapt and overcome. Let your business plan become the blueprint that you can work to in the first 12 months of your business. Amend and update as you go, but don’t lose sight of those original aims and just how you told people you would achieve them!

Good luck with your business plan! 

For your business plan needs visit us at http://www.stellarconsultancy.com/business-plan.htm


Source by Stephen J Jones

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