What you need to know about a business plan [part 2]
To begin, a quick recap (see Part 11):
- A business plan is a written document presenting a project, used to analyze and pilot the project and to convince third parties to join.
- A business plan is an operational roll-out of your business model, complete with figures, and is thus an iterative tool that evolves alongside your project.
- Although it’s not essential for your project to succeed, a business plan can be very useful in certain situations.
Now, let’s walk through the elements that make up a good business plan.
A business plan is composed of a “content” part (written) and a part presenting the figures. It should be noted that the “content” portion is generally considered to have more influence on readers. The figures are less important the retained hypotheses!
A business plan begins with a one to two page overview called an “executive summary.” Its purpose is to briefly and appealingly present the project, to make the reader want to read on. It is essential for the reader to immediately understand the topic
There is no hard and fast rule for the rest. What’s important is to respect a certain logic when building your case. No matter the order you choose or the type of project you are pursuing, we do, however, recommend including the items listed below:
- Project leader/the team: beyond the personal details about your team members (equivalent of a CV), the reader should be able to see if the project is consistent with your personality, skills, situation and personal constraints. Pay attention to the complementarity of your team members as well. Build confidence by clearly exposing how your team could be reinforced, if need be.
- Products and/or services: identify your project, describe it and discuss its origin: how and why did the idea come to you? What are your long-term objectives/your long-term view? Etc. You will be credible if the characteristics of your project respond perfectly to your motivations and personal objectives (see above). Show that you thought up a development strategy before jumping in.
- Market research: explain and describe the targeted market, the characteristics of your intended clientele, state your competition, expose any risks pertaining to your economic/legal/social/professional environment, etc.
- Economic model and projected turnover: describe how your company delivers and shares value to all stakeholders. Explain how you estimated your future turnover in a fact-based manner.
- Strategy and commercial means: describe the strategy that will secure a place in the market for you and grow your business: segmentation of your potential clientele, choice of product/market pair, chosen positioning, as well as any decisions made for your marketing mix (product, price, distribution and communication policies).
- Production means and future internal organization: here, you will define all means in terms of personnel, property, materials, etc., that will be required. Key suppliers and subcontractors should also appear in this section.
- Timeline: which essential steps have already been completed and which steps remain, over what period of time (retro planning).
Naturally, other items can relevantly be added to this list (choice of location for a convenience store, for example). Depending on your intended readers, some items could be more emphasized than others.
A fundamental step in building your project: creating a financial plan, or in other words, evaluating the costs involved in launching and developing your project. Rest assured, you don’t need to be a finance wizard to do it. You just need credible figures and to understand how you will be spending and receiving funds.
Conventionally, the items below should be found in your document:
- A draft budget (or profit and loss account): this usually spans 2 to 3 years and provides a view onto the future profitability of your company. Thinking in terms of multi-year forecasts is helpful in choosing a direction;
- A cash flow projection: this will help determine whether your will require funding, at what stage and in what amount. The evaluated period is generally quite short (12 months).
- A financing plan: it states capital to be raised in order to launch the project under proper conditions. It also sets the share to be financed by equity and by other sources of funding.
The first two will also be useful for monitoring and guiding your actions once your business has been launched.
Sometimes, you may with to add: an investment chart, a break-even analysis, a reimbursement chart for loans, etc.
Beyond the content, the form and how your plan is presented will also impact the reader’s decision. Make sure your document is:
- neat: make sure the layout is impeccable and provides good readability in order to make a proper first impression with your professionalism;
- complete: do not skip any essential sections – be brief, but without forgetting anything that allows your readers to assess the feasibility and viability of your project.
- precise: for you to be credible, your affirmations must be verifiable, so support them. Think to add supporting documents as appendices!
- concise: your document should be no longer than 20 to 30 pages, before appendices. To avoid excessively weighing it down, your appendices could be provided as a second document;
- clear: avoid overly technical professional jargon. Opt for a simple writing style that is easy to understand even for uninformed readers;
- and gets the reader excited: your business plan should convey your enthusiasm, your deep conviction of the potential your project presents, and your credibility as an entrepreneur. You will need to stay realistic and credible, but your document has to emphasize your project’s strengths.
Just think of your readers as you write: and make the job easy for them!
Last but not least, here is a link to help you write your business plan:
- "MyBusinessPlan2" launched by the House of Entrepreneurship
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