It’s all about business planning
You may be an entrepreneur planning to start or to expand a business, you may need to apply for a business loan or you are planning to make improvements in your business activity, in each of the cases you will need a business plan. So what is a business plan? Basically it is a tool to help you clarify the services or products the company provides, your business goals and how to reach them. In other words, a business plan is a radiography of the future of your business.
But the business plan is not only useful for the planning phase of your business. It may also be extremely helpful once you get on the way to achieve your goals. You may use it to monitor progress and to control your business. You may use it as a marketing tool in the process of attracting key employees or future investors. Having a written record of your strategic goals together with a clear monitoring of progress against these goals will convince everybody, be they key prospective employees, potential investors or banks, that you have a strong vision for your business and you can deliver what you promise.
If you fail to plan, you are planning to fail – B Franklin
Basically your business plan will need to clarify for the reader what are your objectives, what are the strategies required to achieves your goals, what are the risks you face and how you plan to mitigate them, what are the key resources to support your objectives, of course including the financing required.
Yes. It does sound impressive and indeed the results should be impressive.
In order to prepare a strong business plan, you need to follow a few simple rules that will help you to keep things clear and try to limit the content and length of your plan.
First, you should keep your plan restricted to six key components:
- Executive summary – the summary has to give the reader a quick but clear view of your plans. The executive summary does not have to be too long as it will distract from reading the rest of the document. And most important, it has to be placed at the top of the plan.
- Business & market analysis – here you may decide to present the industry in which your business performs, the current situation as well as future perspectives, trends etc. The market analysis will give you the comfort of becoming familiar with all aspects of the market you perform in.
- Competition review – this is a very important part of the plan that usually is overlooked or treated lightly. By doing it right you will have a strong tool to understand your key competitors, their strengths and weaknesses and to develop sound strategies to give you an advantage.
- Design and Development plan – this is the part of your business plan where you will describe at lengths your products and/or services, their strengths, qualities and unicity on the market, the advantages they bring to consumers. This is a part where you should gain a lot of interest from the readers of the plan.
- Operations and Management plan – in this part of the business plan you will present how the business will function. You need to bring clarity on the key aspects of organising, running and managing your business.
- Financial analysis – the last but obviously not the least. For sure you have already presented some financial information in each of the previous paragraphs of your plan. But here is exactly where you bring it all together and present the projected revenues and costs of your plans. Your financial analysis will have to include your income and cash-flow analysis, the balance sheet projections as well as the required analysis to assess the financial feasibility of your projects (Net Present Values, Internal Rates of Return etc). Financial ratios and graphs presenting the evolution of the key financial indicators will also have to be presented here.
Second important rule for developing a successful business case is to keep it simple. The reader never has too much time and has a lot to do. So make sure you keep your plan short (20-30 pages plus 10-15 pages for appendixes) as well as keep the wording straightforward. This way you can get your point across quickly and easy to follow by whoever is reading it.
Third rule – use easy to follow presentation models. Especially when you present the financials. Make sure you use simple graphs for presenting the evolution of the indicators, summary tables. But bear in mind that the reader must always be able to read and understand easily where the numbers come from so you need to clearly reference graphs and summary tables to the text.
And last but not least make sure you polish your business plan presentation. In most of the cases the first impression really counts. So aside from the wording, you must also pay attention to the design of your plan. It needs to be easy to like.
We hope you will find this presentation useful. In our next articles we will come back with an in-depth presentation of how to prepare a successful business plan.