by Benedict
Rohan
http://www.mortgagenation.co.uk
© 2007
Once you’ve got a good idea of whether
your business is viable and you’ve analysed the market, it’s time to
draw up a business plan.
What is a business plan? It’s
a detailed analysis of your business, including its objectives and its finances.
It provides an insight into the purpose and vision for the company and how its
goals will be achieved, and sets out the financial requirements for the company
as well as its projected earnings potential.
Use it as
a reference guide, which you can refer to at regular intervals to help you stay
on the right lines. Don’t treat it as gospel though – business needs
change over time and therefore so will the business plan. If you keep on top of
this and amend your plan accordingly, it will help to ensure your business continues
in the right direction.
There are two main uses for the
business plan. The first is as a sales tool to help you present your case to lenders,
investors and potential business partners. The second is for your own internal
use, as a gauge against which you can measure your company’s development
and progress towards its objectives.
Your business plan
therefore needs to be a compelling document that will impress people and convince
them of your ability and the viability of your company. To make it credible, you’ll
have to back it up with detailed research and accurate financial forecasts. Be
careful not to make it flat and lifeless though. Don’t just present the facts
and figures – turn them into a meaningful and exciting business case. A word
of warning
though: keep your feet on the ground at all times and ensure that
your analysis is truthful and realistic. Investors and lenders will see right
through the hype if you overdo it. Also, it is in nobody’s interest to create
a misleading impression. On the other hand, though, don’t aim too low. Objectives
and financial forecasts that seem far too easy and conservative will not impress
and will not provide you with any challenge or incentive to reach your company’s
full potential.
You need to make your report balanced.
Be upfront about both strengths and weaknesses. Put a positive spin on the weaknesses,
though – demonstrate what you will do to overcome them.
Your
true excitement and confidence in the business will only come across if you write
the business plan yourself. It will also help you to develop an even deeper understanding
of your business and what you are trying to achieve. There’s no harm in asking
experts for help with some of the tricky areas, though, such as the financial
projections. It’s also a good idea to get someone to look over it for you
after you’ve completed it to make sure it flows, makes sense and forms a
coherent whole.
The basic structure of a good business
plan is as follows:
Summary – a concise synopsis
of your company and the plan. This may be the only part of your report that a
potential investor or lender will read – they are often inundated with similar
reports and documents and can make snap judgements on whether something is worth
further consideration based on reading these crucial couple of pages. Always write
the summary once you’ve finished your plan to make sure you don’t miss
anything out. Make it confident and attention-catching.
Company
information – provide some context by outlining what your company is
all about. Include the structure of the organisation, its history, information
on the industry, an analysis of the customer base, a description of the products
or services offered. You’ll need to give all the facts to help the reader
understand what your company does, but provide more than this. Don’t just
describe what your company does, but also what makes it stand out – its benefits
and key selling points.
The team – outline
a brief CV for each of the members of your senior team. Also include any external
consultants whose services you employ. Make it clear what they can bring to the
company. Then outline the structure of the rest of your company, perhaps using
an organisational chart. Show the different departments if relevant and explain
what types of positions will be held in each of these areas. Provide a plan as
to how you will recruit, train and manage your workforce.
Promotion
and sales – here’s where you should include all of your market research.
Show that you fully understand your intended customers and your competitors. Outline
how you will deal with competition in the market. Explain your plans for advertising
your business and promoting your products and services.
Operations
– how will your business work? Provide details of where your company will
be located, whether it will own or rent its premises, what materials and equipment
you will need, what IT and other systems you will use, and who your suppliers
will be.
Financial analysis – Summarise the
figures at the beginning of the section to outline the main messages – numbers
and graphs aren’t always easy to interpret. Include costs for every area
of your business and do an in-depth projection of the financial outlook for the
company for the next year, as well as an outline sketch of the likely financial
future over the next five years or so. You should include profit and loss accounts,
cash flow, sales projections etc. Also outline how you arrived at these estimates
– the reader will want to be reassured that they weren’t just plucked
out of thin air. Also, as you’re likely to need to borrow in order to start
up your company, your financial analysis should include details of the amount
of money you require, how it will be used and where you intend to obtain funding.
Think of your business plan as an application form for loans or investors –
anyone who is considering backing you will want to see it.
Objectives
– be clear about where your company is going and what you hope to achieve
in the form of solid objectives. As always, objectives should be SMART –
specific, measurable, achievable, relevant and time-bound – in order to be
meaningful and helpful. The objectives will give a clear indication of how you
intend to achieve what you want for your business. To wrap up your plan, you could
also include a more general future vision for your company, to give lenders or
investors an impression of how your company will shape up and what financial returns
they might receive from it.
