Failing to plan is planning to fail.
The recent series of The Apprentice saw the final four present their business plans, only to find them dissected, torn apart and scrutinised, with those who fell short losing out on the ultimate business prize.
When starting out, many entrepreneurs may see writing a detailed business plan as a waste of time, or worse, a fruitless bureaucratic exercise, which was perhaps why some of the Apprentice candidates failed to produce the goods. However, in almost every growing business there comes a point where you need to put pen to paper and carefully draw an outline of the future.
At MBA & Company we’re often approached by small businesses which never intended to put together a professional plan, but have suddenly found that it is now essential, whether it’s for the benefit of their bank manager or their first round of investment. Whoever the audience and whatever the sector, the key messages of a business plan will be the same.
Firstly, understanding your market should be a fundamental part of your business plan. If you cannot define your market, show there is demand for your goods or services, and that the opportunity is potentially lucrative then your business plan is seriously flawed.
It is vital that you explain who your customers are and include financials that prove there are enough of them to build a business around. When conducting market research, it is important to speak to your target customer first hand and understand their viewpoint.
This also means going further afield then your parents, partners and friends. If looking at an international market, be sure that you understand the local cultural sensitivities as well and it could be advisable to use someone with local market knowledge to assist.
Once you have established the market and who your customers are, it is required that you explain why they would choose you. What is your product and service? Who else is in the market place with similar offerings? What is your USP? Why would they choose yours and not the others’?
It could be that you are faster, smoother, tougher, cheaper or better for the environment - identifying your strengths and highlighting your unique qualities will create a value proposition that will help you build sales.
The next step is to build a case as to why you are the best person, people or group to lead the business and take this value proposition to market. This chapter should provide full biographies of your team and stress any relevant pieces of information, such as their experience within this market and / or selling this product.
It should also outline the roles that each member will play, whether it is CEO, or IT manager, so that the reader will begin to have an idea of the company’s structure. This is also where any ownership rights should be clarified.
Now comes the exciting part - what you actually plan to do. Here you can look at how you will you spend your time and money. Give examples of how you will drive your business through sales channels, how long these will take to set up, what your marketing plans and objectives are. Include a clear roadmap and indicate which milestones or achievements you intend to reach and when.
Showing that you know how you will reach your goals is absolutely pivotal if you are to be taken seriously.
All of the above chapters combined will culminate in the section that the investors care about most - the financials. Having identified your market, worked out your assumptions on what you could sell and how long it will take you to sell it - you should now be able to provide an idea of what the end of year one will look like.
Ideally you should do a three to five year plan and provide a profit and loss forecast, cashflow statements and balance sheets. If seeking investment, you should also give an educated estimate, supported by financials, on how much the investor should expect back.
All chapters of your business plan are important, but this is the most critical, so you may find it useful to seek expert help. It is also highly important that you remain realistic. Do not be tempted to exaggerate your yardstick for success. Much as you love your company, stating that you will be internationally successful overnight will ruin all your credibility!
In conclusion, when it comes to writing a business plan be clear and concise, optimistic but not unrealistic. It could be the most important document you ever write.
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