How to create a good business plan?

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.

Biography:

Author: Benedict Rohan

Website: http://www.mortgagenation.co.uk

Benedict Rohan works as a freelance finance writer. Commercial Mortgage, Homeowner Loans, RemortgagesThis article is free for republishing
Source: http://www.articlealley.com/article_122591_19.html