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How To Write A Business Plan

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HomeStrategy

How To Write A Business Plan

1

A good business plan defines exactly what you want to achieve and how you intend to achieve it. Before anyone invests in your business, lends you money, awards you a grant, signs a deal or joins your team, they will expect to be clear about how you compete and how you make a profit.

How to write a business plan

How to plan

Before anyone invests in your business, lends you money, awards you a grant, signs a deal or joins your team, they will expect to be clear about how you compete and how you make a profit. To win their support and keep yourself cash positive, your business plan will explain the path you are following and the objectives you are pursuing. Instead of being an occasional, theoretical exercise, it will ideally become a living framework to inspire your business when it launches and as it grows. So how do you go about writing a plan to win over the audiences on which your business depends?

Set the scene

In about a page, introduce your business and its potential. In this executive summary, you will highlight:

  • what makes you different
  • how you operate
  • what your financial targets are
  • what investments you are proposing to make and when
  • what value the business could reach on exit

Your business

Then bring your audience up to speed on the stage your business has reached:

  • what is the idea on which it is based
  • who owns the business and its intellectual property
  • what is the expertise you offer
  • what is the strength of your brand and reputation
  • what is your current financial position
  • what are your objectives over the next three to five years

Your market

Your audience will expect you have a clear grasp of how you compete and reach your customers. Explain:

  • the industry in which you operate and against who you directly compete
  • what value you offer and how you generate revenue
  • which customers you are targeting and who are the first to sign up
  • what is the potential size of the market

Your operation

You now have to inspire confidence that you can fulfil the potential you have laid out. Describe:

  • the capabilities of those who will be directing and managing the business
  • the internal structure that you are adopting for your business
  • your process for exercising control over risks and costs

Your finances

Your audience will want to see the details of the financial projections you are making:

  • forecast the sales that you expect to make over the next three years
  • break down the costs you will incur and when
  • calculate the flow of cash in and out of the business, highlighting the point at which you expect to break even
  • give a profit and loss account for the end of your next two to three years of trading
  • explain the assumptions that underlay these figures
  • make an estimate of the value that your business could realise on exit in three to five years

Your proposal

When you are raising funding:

  • be as clear and specific as possible about how and when the money will be spent
  • ask for a realistic amount (too little and you could run out; too much and you could lose credibility)
  • calculate the extra value that an investment could create for the business and be ready to negotiate on how much equity you are willing to release

SMEforGrowth Editor 19.04.16

One comment

  • Mario

    April 24, 2017 at 3:46 am

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