If you were to select one key element of a successful business it would more often than not be an up-to-date well written business plan. Too many people ignore its status as the guiding light of your business and the one document that encapsulates what your business is about and where you want it to head. A would be investor or even just a new employee should be able to pick up your business plan, read it once and understand exactly what your business does and how it does it differently from anybody else.
There are countless templates on the internet – many free – which are all very helpful but it is the content you include that determines whether your business plan is great and fit for purpose, or just paying lip-service to another form. However you draft your business plan, there are certain essentials you must include and must keep in mind as you are compiling it. Here are just six such tips to help you on your way:
1 Define your business as an answer to a problem
Too many people begin their business plan with a description of the company and the products or services they intend to offer. That’s no good if there is no call for those services or products because then there is no need for the business. Even if you are moving into a crowded market, identify the problem you can solve, and then go on to say how you will solve it.
2 Keep jargon out and keep it succinct
Although potential investors or lenders will be interested in seeing your business plan, the most important person your business plan should be written for is yourself. Your business plan is your constant reference tool, the item you will need to refer back to in good and bad times to check your business focus. So you need it to be slick and easy to read. You should look to impress with the content not the language, and make it accessible by anyone so they can read it and know exactly what your business is all about.
3 Show understanding of the market
Nobody wants a chronicle of the commercial world, but a bit of background of the sector you will be operating in, a brief analysis of the demography and acknowledgement of any rivals and how you will fit into all of that, all goes a long way towards proving you may have the where-with-all to make it happen.
4 Make your business model clear
Any investors or lenders will be looking at your business plan to tell them clearly how your business will make money. So the key information to get across in your plan is the business model you will be using and how that will drive you revenues. Your plan will need to be realistic and provable, so take time and fully consider the best model for your business both long term and short term.
5 Include details about your key people
While what your business does and how it does it is key to whether or not it will succeed, human nature means people invest in people – whether knowingly or not. In people, investors will trust, more than even the most innovative of ideas.
6 Forecast your financials
Financial forecasts can often, at a glance, show how serious you are, how much you really understand business and how realistic your goals actually are. You need to clearly show where and when your break-even point is and how you you foresee the cash-flow coming in to keep things ticking along. Make clear what if any assumptions you have made such as on growth (also say why). Project you financials both short, medium and long-term to cover the next five years.
Aim to educate via your business plan, not entertain. Once a potential investor has read through it they should have no fears about investing and back you. If not you haven’t quite done it right.