A business plan sets out the purpose and objectives of a business and the way it will achieve those objectives. The complete plan will provide:
- Details of the market in which the organisation operates,
- the assumptions used to create the forecasts,
- Details of key staff and management experience,
- Marketing strategies, competition, and the organisation's unique selling point (USP),
- The funding requirements of the organisation.
A company's management will create a business plan and use it as a tool to guide them in running the business. The documented business plan will also be of interest to other existing and potential stakeholders in the company, such as:
- Advisors to the business
- Grant givers
A complete business plan will contain the following:
- An Executive summary: This is the most crucial section of the business plan. It is written last when all the other sections are complete. Lenders and investors will make a judgement about a business based on this summary, and if it does not appeal to them, they will not look at the rest of the document. It is an overview of the business and should cover the following:
- A description of the organisation; in particular its products or services
- An explanation of the unique selling point (USP) of the business, and how that will ensure success
- Details of any exploitable intangible assets; customer contracts, market position, trading reputation, patents, know-how, management expertise
- A financial summary; trading projections, profitability, return on capital, and cash flow.
- Funding requirements; equity capital, short and long term borrowing
- Exit strategy for investors
- An analysis of the organisations Strengths, Weaknesses, Opportunities and Threats (SWOT).
- A description of the company: This will usually cover the following matters:
- The legal details of the business or company such as company number, date of incorporation, shareholders and management
- The company's strengths and abilities
- Trading history
- Objectives of the business and its mission statement
- Overview of the market and industry in which the company operates: The purpose of this is to let stakeholders understand the market and industry in which the business will work. The size of the market, the competitors in that market and the business potential. Most importantly, this is the section of the business plan, which demonstrates why the business will succeed in that market.
- Strategy: This section explains how the company will win orders and market share from its competitors. In particular, it will demonstrate the success of the unique selling point (USP) that sets the business apart from competitors. It will also describe how the company will address any weaknesses.
- Management: This section provides CVs and details of the management and personnel who will be responsible for making sure the company achieves its goals. The purpose of this section is to let stakeholders assess the ability of the team and whether they can deliver the results required.
- Marketing Plan: Any market research will be reproduced in this section. A marketing strategy should be explained in the context of the market research. The individual elements of the marketing strategy should also be explained. This section would include sub-sections on advertising, pricing, social media, sales teams and public relations.
- Financial Forecasts: Which will consist of:
- Start-up expenses
- Projected profit and loss accounts
- Projected cash flow forecasts
- Funding requirements
- Projected Balance sheets
- Projected dividends or profit distributions
The Benefits of a documented business plan:
- Easy for potential stakeholders to understand: A comprehensive documented business plan is organised, logical and easy for readers and users to follow. Readers that have not been involved in the preparation of the business plan will be able to follow it and understand it. The logic of the management's strategy based on an explanation of the business and the market in which the business operates will be apparent and existing and potential stakeholders will see that the management has done its homework and knows how to deliver results!
- Target setting and variations analysed: Targets are set together with an explanation of the information on which the targets are based. Variations between actual results and targets can be analysed. The impact of the actual results on the business can be assessed, and the variations will help management decisions. Tested assumptions can be verified to assist management
- Management tool: It allows adjustments to strategy, targets and forecasts to be made based on operating results. This may be one of the most important features of a business plan for new businesses. A business plan should be a management tool used to run the business. It should inform management's strategy based on actual results and changes in the industry or market.
Business Plan Software
Business plan software is essential for preparing business plans. The many benefits of using a good programme are set out below;
- Sturdy visual representation: a programme that can create infographics and diagrams is essential. Data, statistics, numbers and budgets are easy for the reader to understand and take in.
- Pre-designed business plan templates and step by step guides: These are useful for adapting to your own requirements. They can prevent hours of agonising over the content and presentation of your business plan.
- Quick financial calculations: It is essential to have software that allows you to input the data and then does the calculations for you.
- Easy to Edit: Having input your data, you will need the ability to change it and update all the forecasts.
- Comprehensive template: A comprehensive business plan template ensures that you cover all aspects of your market, marketing, costs, management and forecasting.
- Easy to use management tool: It is essential that you have software that gives you a way of comparing actuals against forecasts so that you can analyse the variances. This improves future projections and allows you to test the assumptions used in preparing your forecasts. Most importantly, it allows management to make decisions on the basis of well analysed information.
We recommend Business Plan Pro as your business plan package.