Writing a Business Plan
A business plan is essential whether starting a new business or making any changes to your existing business. The process of writing the plan allows you to refine your corporate strategy and analyze the industry and your company’s positioning. The plan will also serve as a roadmap going forward and will help you communicate your strategic vision. Potential investors and lenders will frequently request a copy of your business plan to better understand your company and your future plans.
There is no one way of writing a business plan, you will have to adjust your plan to best suit your company and industry and its challenges. However many plans will touch upon some of the more commonly used main topics below and it may, therefore, be helpful to include these in your plan if you are writing a business plan for the first time.
Executive Summary
This is a brief introduction to your company and your vision. It may also include a brief introduction to the industry, management team and also some broad strokes financial projections. View the executive summary as the 2-minute sales pitch for readers who may not have the time or inclination to read the entire business plan. It is often helpful to write the executive summary last when the rest of the plan is completed.
Company Description & Strategy
This is where you go into details about your company. What product or service does your company offer? How did you identify the need for this product or service? What is your company’s history? It can be helpful to include a SWOT analysis of your company’s Strengths, Weaknesses, Opportunities and Threats.
Outline your strategy and goals for the business spanning the coming 6 months to 5 years. What is your strategic vision? What challenges do you foresee and how will you manage them?
Management & Organization
Include biographies or resumes of your key team members and discuss how their background and experiences will benefit the business. If you have a large team, an org chart might be helpful in explaining communication lines and responsibilities.
Identify your corporate structure and your key shareholders/investors.
Market Research & Analysis and Competitor Analysis
Your reader will want to understand the market, industry and competitor landscape. Describe the current market structure and size. What is the market’s growth outlook? How will the market change over the next one to five or ten years? Will external factors such as changes to regulation or technology impact the market?
Describe your main competitors and how they operate. What do they do well and what could you do better?
Marketing and Sales Strategy
Describe how your product will be sold and how you plan to market it. A good method is to discuss the Four Ps – Product, Price, Place and Promotion. You should also outline your social media plans.
Funding Needs
Outline your funding needs for the coming three to five years and what your planned use of funds is. Specify what type of funding you will need to be it self-funding, equity or debt. Outline how you plan to repay your investors be it through interest payments, dividends or a sale of the company.
Current Financials and Projections
If your business is established, include your income statement, balance sheet and cash flow statement for the past three to five years.
If your business is a start-up you should list all your assets as well as your start-up costs and any personal expenditures you have made.
You also need to provide detailed financial projections for the next three to five years. This should include a projected income statement, cash flow statement and preferably also a projected balance sheet. Specify your product pricing and unit sales and show how this correlates to your market size discussion earlier as well as your marketing plans. Detail your costs and break them down by cost of goods sold(cogs), employees, SG&A etc. and show how they will grow as your revenues grow. Research the capital expenditure needed to fund your projected growth rate. Spending time fleshing out a detailed financial plan is essential to understanding your business and will impress upon investors and lenders that you understand the financial aspects of running a business.
Appendix
The appendix should include any documents you would like to add to your business plan such as patents, contracts, letters of reference, licenses, etc.
The team at Grow Capital will be happy to assist you in preparing a business plan ahead of contacting potential investors or lenders. We have access to a number of innovative and competitive solutions, so contact one of our advisors today.
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