Business Planning

PREPARING A BUSINESS PLAN

 

The Importance of the business plan

The master plan for your business will provide a benchmark everyone involved in running the business and demonstrate your talent and capabilities to a bank manager or potential investor – and importantly for yourself and your supporters.

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The importance of this first plan for your business will be to:

  • Define your business goals, legal status and target market
  • Assess the commercial viability of your business, consumer demand, break-even point, and estimated first year profit and loss forecast
  • Include a  forecast showing total income against expected costs
  • Include a cash flow forecast with estimated timing of income to balance payments with receipts
  • Clarify the nature of your business model and its potential in the marketplace
  • Confirm your launch strategy and timing plan
  • Give a vision of future developments

Writing the Business Plan Management Summary – Key Elements for Investors or Your Bank

The management summary is the last thing your write, and the first people read. Ideally, the summary should be no longer than 2 pages. The job of the summary is to give an overview of your business plans and communicate the key points.  The detail will be included in the supporting sections.

If you have all the finances in place, and the business plan is primarily for your management purposes then your first business plan will provide the benchmark for future achievements.

If on the other hand, you’re writing to attract a potential investor or for a bank manager, the aim is to make them:

  1. Excited by the idea and your ability to make it work
  2. Impressed with your depth of knowledge of the market and the competition
  3. Confident of your personal business background and management talent
  4. Reassured of you people-management skills
  5. In agreement with your financial assessment and the method you’ve used to calculate the future business prospects
  6. Stimulated by your marketing ideas and sales support strategy
  7. Greatly encouraged by your profit forecast
  8. Approving of the amount of money you’re asking for and what you intend to spend it on.
  9. Supportive of your projections that will lead to an exit strategy for the investor (remember my story about the business coach – “the only reason you start a business is to sell it”.
  10. Appreciative of the personal investment you are contributing as your stake in the business
  11. Accepting of the percentage share in the business you have proposed in return for the financial backing

If you’re writing the plan with the aim of getting a bank loan, then the emphasis should be place on the strength of the business concept and your ability to generate a sufficient commercial profit.  Expect any lender to ask for personal guarantees for any money lent to you, and further to ask for another person of substance to act as your guarantor – normally a member of your family.

Last but certainly not least, writing a business plan will give you confidence that you’re on the right track. Your business plan reflects one particular moment in time, the time it was first written.  The first plan is immensely valuable tool but should be refined and updated by events and any developments.  Don’t stick to the first draft  like glue.  Improve and develop as circumstances change. Continue to build on the strong foundations you’ve created.