Here’s the truth – all businessmen and businesswomen need money. And in order to secure funding, business plans have to be written. My name is Jeremy Powers and this post will hopefully help you understand how to make your business plan stand out.
For starters, what is a business plan?
Essentially, it’s a plan of plans – a way to structure any future plans that you might have for your business, both short- and long-term. Of course, it’s unlikely that you’re going to stick to it 100% as you run your business post-launch – the economy and the markets are, after all, unpredictable – but it’s nevertheless a great idea to have a business plan, not least because it’s a primary tool for attracting investors. A business plan functions as a kind of contract between you and any investor or lender you approach – a document that serves as the face of your business. This is the first impression your potential providers of external finance are going to have of you, and in 90% of business plans, it’s also the last. So what can you do in order to end up in the smaller pile?
I’m just going to go ahead and say this. Don’t. Procrastinate.
I know it’s tempting to leave it until the last minute and hope that your business plan would just “write itself”, but this isn’t the case. Securing funding is very difficult, and if you mess up your business plan, you will miss out in the first round. Business plans take time – you need to do research, obtain some consultations, carry out the necessary analyses and compile all of that into a single document.
Like any document of the kind, a business plan has to be structured and developed properly. There’s no use in writing a plan by copy-pasting the template boilerplate clauses found on the Internet – most investors and lenders see heaps of such plans and can easily spot them a mile away. A business plan must be written in a clear, concise and engaging way that would make it stand out from hundreds of business plans that cross the lender’s desk every day. The best advice I can give you about writing a business plan is to keep in mind your vision for the business and why you’re writing this business plan at all times.
A front-page executive summary is a must in a business plan – after all, how else is the reader supposed to know right away what kind of business you’re operating and what you need? Bankers prefer to know right away what they’re going to spend the next few hours reading about, and if they don’t, they’re unlikely to give such a plan another thought. To make the document even easier to navigate, a contents page should also be included.
However, no matter how glossy and nice your plan looks, the investors are after the content, not the package. At the start, you should give an introduction into who you are and what your business is all about. If you’re just planning to launch, give an overview of your vision and goals, and if you’re already running your company, I recommend that you give some insights into the history of your company, combined with the vision. It would also be a good idea to explain the timing of your application – you need to make it as compelling as possible in order to convince your investors to part with their money and give them to you.
After you’ve completed your introduction, you should give an insight into how you differ from your competitors. I’ve compiled a list of questions you should answer in that section below:
- What makes your company and your product or service better than those of your competitors?
- What would make the prospective customers come to you instead of them?
- What are the main drawbacks of your competitors and how is your company going to address them?
- What can you offer that your competitors can’t?
- How would you able to stay afloat and protect your company from the economic turmoils better than your competitors?
- Will you be able to deal with these economic issues better than them?
- What are the main issues faced by your company at present and how would you address them, internally and externally?
There are, of course, other questions you should answer in this section, but you need to make sure, as I said earlier, that your plan is succinct and clear all the way through. And, like I said earlier, don’t leave it till late. I’m certain that you won’t have the answers to all these questions the moment you decide to write a business plan, and undertaking research into your competitors would take time.
The next section should be about the structure of your company and your management team. Your investors would want to see what kind of people would be working for you and what you can achieve as a team. Detail the skills, knowledge and experience of each member of the team and, if applicable, the Board of Directors. Have they won any awards? Any major accomplishments achieved by individual members or all of you together? The bankers would want to know the roles of each person within the company and how they would cover each area of the business. They would also want to see some examples of you creating your own network within the company, as well as outside it.
When you’ve detailed who’s going to be working for you, you need to explain how you’re going to work and earn your income. Provide a detailed breakdown of your considered marketing strategy and give some explanation as to how you’re going to market your product across various channels throughout which you would be connecting and engaging with your target audience. These analyses and explanations should be accompanied by a budget – otherwise, the investors have no way of knowing if you’ve thought the strategy through and whether you’re going to use their money as intended.
Also, you should include the answer to the question of where you’re going to be operating from, whether it’s going to be a home-based operation or you’re going to rent office space. If you’re going to get a lease, you should include the details of your landlord, the property to be rent, the costs and other particularities of the lease.
As I stressed earlier, keep in mind at all times that you’re writing this plan in order for people to give you their money. For that reason, you absolutely have to include a detailed forecast of your sales and cash flow for at least your first year of business, if not five years. Make sure that you investors understand how much money you require in order to make the forecasts come true.
Last but not least, don’t forget about the appendices – for example, technical specifications of machinery would be included in a business plan related to an engineering company, whereas a planned publishing agency would likely include a list of proposed client genres. Market research documentation is also usually attached to business plans, as well as various other data in various forms.