A business plan is a blueprint for the future running of your business. So when writing the plan, you'll need to be able to establish:
How you'll develop the product/service
How you will deliver it
How will you market the business
How will it make profit (not just money)
How will the business deal with future market changes and trends
Using a business plan software:
The problem with business plan softwares is usually in the financial modelling side. The business plan itself can be quite templated and non industry specific when writing using a software, but when you couple that with a financial software that works on a general template your quite limited.
If you're not looking to raise finance and just want a projection for yourself, then we suggest learning some basic excel and creating something bespoke.
Despite the need for a bespoke, your-business-specific business plan, there are generally formulas, outlines and structures that can be followed to create a standard business plan that may be easier to achieve when writing the plan yourself.
1 - The Executuve Summary
The key word here is summary. Meaning it should come last and literally summarise the rest of your business plan. It should also remain short as this is the first thing an Investor sees and you need to try and grab their attention here - or they won't keep reading.
Other things to keep in mind is that your business plan may be read by people who are not familiar with your business concept or structure, so avoid technical jargon. This is the case for new employees as well as investors. Even family members who you want to convince to support you.
The aim of the executive summary is to quickly 'sell' the idea of the business to anyone reading it. It does this by describing the problem, your solution, your achievements, your financial requirements and projections and the opportunity for your business and investors.
The next step is logical. Imagine if you were an investor and you've just read this great idea, what would you want to know more about? The team, of course.
2 - The team
Investors have been said to be most interested in the people behind the business than the business itself sometimes.
Make sure that you showcase not only what the team have that make them capable of making the business profitable. But also that they are the best team to do it.
3 - The proof
At this stage the investor probably has a good idea whether or not he's interested in investing in you. They like your idea and they think you have the manpower to do it. Only one question remains.
"How do I know it'll make a profit that justifies my investment and gives me a return?"
The next part of the business plan needs to answer that question by showing:
- Market Research - your market research MUST show that you have fully researched and are well aware of the industry including current and predicted trends, big players, the value of the market and more, make sure you add sources to your plan to add credibility,- Customer Profiling - who is your target market? What do you know about them?
- Marketing, pricing and Promotion - what's your plan for marketing, is it viable? If you want to advertise on TV show that you know the UK viewing figures and that you've got your quotes ready. How will you be pricing your products/service and will that have an impact on your margins and targets?
4 - The competition
Great, thinks your investor. So, why is no one else doing it? And if they are, how can you compete? Competitive analysis has to analysis your competitors success, failures, and your USP that will challenge them.
5 - The financials
Our best advice isn't just to be realistic, it's to use the market research that you've already highlighted to support your finances.
When creating your finances don't show sales from month one if you're not planning to sell from month one. Figure out when a realistic start date for you to be able to take in orders is.
Consider late payments in your cash-flow. Unless you're an commerce or retail business, client payments may not always be on time and your financials should account for that to ensure a health cash flow is realistic.
What's the real sale value - after cost of sales and any other margin busters. For example, don't just think delivery prices, think packaging.
Account for repeat orders, referrals and up sells to bulk up your forecast but keep it realistic.
What's your break even point each money? Use that figure to give yourself your monthly target.
The above numbers will help translate your business plan into a document that investors will be able to use to figure out whether an investment is worth it - but it's also good for you to see whether your own investment - money or time, is worth it.
A full set of financials should include a Comprehensive Proforma Financial Projections – Income Statement, Cash Flow, Balance Sheet, start-up requirement, benchmarks.
All these documents would come together to show that there will be more money coming in than going out and that you are essentially - 'cash positive'.
The financial modelling will be the foundations for your funding requirements and your business valuation. It will thus be the way that you work out how much equity you should give away for the amount of investment required - but when asking for finance make sure you outline what the start up costs are and where the money will be used.