Any successful entrepreneur will tell you that a good, solid business plan is essential for any new enterprise. It serves not only as a way to secure external funding, but enables you to set objectives, track your progress, measure success and spot potential pitfalls.
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If you are about to embark on your own new venture, here are a few tips on how to put together a realistic start-up plan.
What should it include?
Your business plan should provide all the details of your planned enterprise, from sales and marketing to personnel and finances. It should begin with an executive summary, an overview of the whole business, a brief description of what, how and to whom you plan to sell, your sales and marketing strategy, personnel and operational details such as how many people you plan to recruit and information on production, premises and IT requirements, and, perhaps most importantly, your financial forecasts.
Getting each section right requires a good deal of thought but the process of writing your plan will help you to focus on exactly how you plan to make a success of the business.
The executive summary and business description
The executive summary is more important than you might think, particularly for anyone hoping to secure funding. Many investors or lenders will make an initial decision based solely on this first section so getting it right is essential.
It is basically a synopsis of the key points contained within your plan, and should include key features from each section, written in a clear and concise manner. The reader should understand what your business is about and want to read on.
The business description should be brief but include a little more detail. Provide an overview, ie. type of business and sector, your relevant business history, legal structure and your vision for the business. It should also reveal exactly what products or services you plan to offer, and must reveal why and how you believe there is a market for your idea as well as how you plan to develop and progress the business.
Sales and marketing
Defining your market and your position within it is a must for any entrepreneurial venture. Full awareness of the marketplace is essential so any market research that you have carried out should be included here. This is also the place to show that you recognise and understand your target audience and the competition.
With this in mind, you should describe exactly how you plan to position and market your product with a full marketing strategy. Information on pricing, marketing and advertising, including costs, and your proposed method of selling are the key factors to include.
Personnel and operations
It may be that you will be flying solo when you first start the business, but if not, it is important to show any potential investors who, where and how your team fits into the business, including advisers such as accountants or lawyers. Those setting up a business as part of a team should include a brief paragraph detailing each person's background, experience, qualifications and skills, as well as showing their commitment to the business.
Details of your operations, meanwhile, should focus on elements such as premises - the what, where and how much or your planned location - production facilities, whether outsourced or not, with details of capacity, equipment required or external suppliers, and details of IT systems and procedures for stock control, management of the accounts and so on.
One of the most important elements of your business plan is the financial forecast section, and any information you give will be scrutinised so it's essential that the figures stack up.
Start-up costs, overheads and working capital should all be estimated, as well as projected sales income, an realistic estimation of the profits and loss you expect to make, and a cashflow projection for at least the first year's business. Running costs and your personal living costs should be taken into account, as well as repayments made for any business borrowing. Always include a contingency fund (25 per cent is a good starting point) in case the business is slow to take off. Once you have worked out your expenses, compare them against your sales forecast. If the figures don't match up, you will need to find ways to reduce costs or boost sales.
Other tips for a top-notch business plan
Remember that your business plan can be tailored to a specific audience. For instance, if you are hoping to secure external funding, you may want to focus on detailing the return they can expect on their investment and the timeframe for those proposed returns.
Lastly, do ask an independent source to review your plan and offer constructive criticism. Business Link, which also provides an online template for business plans, in your local area should be able to help and offer excellent advice on how you can improve and perfect your plan.
Have you started your own business? What are your top tips for business plan success? Leave your comments below...