Many people think of writing a business plan as an exercise in pointless but necessary bureaucracy, a hoop they have to jump through to get to external funding. But a Business Plan can be a useful and constructive planning tool, whatever your financial situation. Think of it as a map for future growth: if you don’t plan where to go, you’re inadvertently planning on going nowhere.
In order to write your business plan, you need to know what you want to achieve. This sounds obvious – of course you know what you want to achieve. But can you quantify it? And how will you measure it? To do this, you’ll have to spend time examining the strengths and weaknesses of your business – a process that is beneficial in itself. Researching your own company helps you to take a critical look at what you have to offer and who your competitors are. This enables you to better navigate the industry minefields and gives you a benchmark against which to measure success.
This article will take you through the seven steps of writing a focused and effective Business Plan. Work through each section carefully and when you finish you’ll have an ordered, content-rich document that gets you where you want to go.
Once you’ve finalised your Business Plan, the first section your reader will come to will be the executive summary. However, don’t try to write this section first. Once you’ve completed the first six steps below, you’ll be in a much stronger position to write it.
Step One: Describe your Business
The first step is to describe your business: past, present and future. Get started by asking yourself the following questions:
• What do I sell or offer? Why?
• To whom do I sell?
• What is the history of the business?
• What is my vision for the future?
• What is different about the services I offer?
• What is the legal structure of the company?
Think about your audience carefully before you write the description. Ask yourself what words and phrases they will understand and be careful not to include too much jargon.
Step Two: Market Research
Think about your industry and what you think the future trends will be. Then analyse your competition. What are they doing now and what are their future plans? Determine what size of the market they hold and then clearly define where you fit into the mix.
Step Three: Marketing and Sales Strategy
Ask yourself why companies buy what you offer, and how you sell it. Think about how you are going to reach the organisations that need your services and what pricing plans you’ll offer. Whether you’re an in-house department, specialist contractor or a large multi-service company, there’ll be a variety of ways to reach prospective clients.
Step Four: Management and Personnel Team
Think carefully about your management team and outline the background, experience and qualifications of each individual. The people on your team will often make or break your success. Fully evaluate their credentials and look out for any skill gaps that could be improved with training.
Step Five: Operations
Analyse the location of your business, in terms of advantages and disadvantages. Your own premises, production facilities and IT systems must be excellent. Make sure you address any weaknesses in your plan with recommendations for improvement.
Step Six: Financial Forecast
This section requires you to translate the contents of your plan into numbers. Include cash flow statements, profit and loss forecasts and a sales forecast. Don’t forget that if you’re looking for funding, you need to spell out how much you need and how you’ll repay the loan.
Step Seven: Executive Summary
Leave this until last, even though it goes right at the beginning. Once you’ve followed all the other steps, you’re in a position to write this stand-alone document, which outlines the key points in your entire plan. Keep it to a maximum of two pages. Remember, some people will only read this section – so make it shine.
Tip: rather than trying to distil the full document down, follow your original document plan. Just write less in each section this time (a couple of sentences or a paragraph, rather than several pages).
Ask a trusted colleague to read the plan and critique it. Do they agree with all of your statements and calculations? Can they think of anything you’ve left out? They may also pick up on misspellings or formatting errors that you’ve missed – a second pair of eyes is invaluable.
Finally, the ink may be dry but your business is constantly changing. Your business plan is a dynamic document, so you’ll need to update it regularly.
Rob Ashton is Chief Executive of Emphasis, the business-writing trainers. Emphasis provides a wide range of business-writing courses, including report-writing courses for individuals.
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