Here is a down-to-earth guide to writing a business plan.
Although there is no single formula for writing a business plan, some elements are standard in all business plans. These are executive summary, a description of the business, a business management and marketing plan, financial projections and supporting documents.
Elements of a Business Plan
1. Table of Contents (1 page) – Just like in any book, this page should be laid out in an organised manner. Make sure the page numbers match the plan after you are done with all your revisions.
2. Executive Summary (2-3 pages) – This is the section that determines whether or not a financier will read through your business plan. Make it short and interesting.
The executive summary must clearly show the growth and profit potential of your business, while pinpointing management’s prior relevant experience.
3. Company Overview (2-3 pages) – This section describes your business. It describes the product and/or services you specialise in and the markets you serve.
It also describes the legal form of the business – head office location, year of formation, ownership, etc. Remember to talk about aspects that make your company unique.
4. Product and/or service (1-3 pages) – This is where you list your products and/or services, with a brief description of each item in the order of significance or highest sales. The description should be down-to-earth (avoid using technical jargon).
Use this section to explain the critical factors for success and describe the unique advantages that your company enjoys in the marketplace. Describe challenges and barriers to entry.
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5. Market Analysis (5-7 pages) – This section defines the market, size and growth prospects. Profile your targeted clients . Talk about their buying behaviour and what would make them choose your products or services over the competition.
Also profile your competition, discussing their share of the market, their strengths and weaknesses. Its advisable to show your data using graphs and charts.
6. Marketing Plan (4-6 pages) – This section presents your business’ strategies to penetrate and capture the market. Here, describe the marketing and sales strategies that you will employ to reach your targeted clients in terms of promotion, pricing and distribution.
Describe your company’s strategies in terms of public relations, trade shows, direct mail, advertising or any other marketing plans that you intend to use in promoting your products.
7. Risk/Opportunity (1 page) – Describe the major risks that you face, for example in the areas of technology, market penetration, etc. Explain how you will address those risks.
8. Management Team (1-2 pages) – Create a profile on key employees including their age, qualifications and relevant work experience. Be sure to emphasise the team’s relevant and proven track record.
Note your company’s key open positions and how you intend to fill them. Describe your outside support team. This includes accountants, advisers and board of directors.
9. Capital Requirements (1 page) – Mention the amount of capital required and be sure to explain the uses of the money sought. This must be tied to you company’s development goals.
10. Financial Plan and Analysis (10 pages) – Include 3-5 years of monthly Income Statements, Balance Sheets, Cash Flow Statements and Break Even projections.
Income statements should be monthly for the first year or until profitability is reached, then quarterly thereafter.
A detailed financial forecast demonstrates to the venture capitalist that you have thought out the financial implications of the business’ growth plans.
11. Appendices – This section is used to add support for the plan you have presented. Support documents include brochures, clips from industry publications, photos, market research, etc.