Behind every solid business lies a solid business plan. A well thought-out document clearly stating where you’ve been, where you are and where you’re going not only helps you remain focused as a start-up, but sells your idea to potential investors too.
Writing one needn’t be a daunting task, but it does need to be comprehensive yet clear and concise. It’ll be used as a selling tool to secure things like loans and much like a CV, if badly written, it could be tossed in the bin in less than 30 seconds.
Here’s what you need to include:
This may seem obvious, but you need to begin by stating who you are, what your business is called and include other contact details such as your email address and telephone number. If your website is up and running, don’t forget to include that in this section too.
Nailing the executive summary is crucial, as it needs to be compelling enough for the reader to buy into your idea and invest more time into reading the rest of your document. Although this appears at the beginning of your business plan, you’re better off writing this last as it is essentially a summary of the entire document.
Make sure you include a brief summary of your business, the reasons behind your business plan and where you intend for it to go, as well as details of your financial forecast for the first few years of trading.
Once your reader has learned about your business plan, you need to wow them with your elevator pitch. This should include your company name, your strapline and a short but sharp summary of your business – in no more than a couple of paragraphs!
So you’ve sold your idea, now it’s time to sell yourself. This section needs to illustrate your story and how you’ve got to where you are today, including work experience, training, education and qualifications.
Don’t be afraid to get your personality across here; include some of your personal hobbies and interests, ensuring they’re relevant, non-generic and, most importantly, true!
Whether you’re selling a product, a service or both, you must detail what you plan to put out onto the market. You may only have one or two products to begin with, but if you have plans to extend your range in the future, mention these as well.
You can’t market your product without a well-defined target audience. Here, you must illustrate who you believe will be buying into your brand, mentioning age range, gender and where they are based – is your product or service going to be aimed at your local area only, or is it going to be sold nationally, or even globally?
You must also show that you’ve gotten under the skin of your target audience – why will they want your product and what kind of triggers will compel them to buy it? If you are already trading or have sold a similar service in the past, you can also include details of your experiences here.
One of the main reasons so many start-ups fail is due to a lack of solid market research. Setting up a business based on gut instinct and feedback from loved ones alone isn’t enough – you need to cast your net wider. Write a brief summary of who you targeted, mentioning the key findings and what you learned from it, detailing any tweaks you had to make as a result.
Marketing is another factor which start-ups often overlook, as they underestimate just how much must be spent to get their product or service in front of their target audience. Include how much you are spending on your marketing and what your strategy includes, whether that’s using the services of a search and PR agency, or local press and radio advertising.
Knowing your competition and their individual strengths and weaknesses means you are better placed to find that gap in the market and fill it with your brand spanking new product or service. Remember to include local, national and international competition where appropriate.
You should then finish this section off with a SWOT analysis, detailing your own strengths, weaknesses, opportunities and threats, as well as your own USP.
A detailed structure of your business and how it will operate day-to-day needs to be outlined here, including where and how your product will be produced, available payment methods and how you will deliver it to your customers.
If you are using suppliers, include information on who they are, their pricing structure and your payment arrangements, as well as why you have chosen them.
Have you hired an office or warehouse as part of your business? If so, make sure details of rent are included, as well as the costs associated with any equipment bought and where it was purchased.
It’s important to include any legal and insurance requirements in this section, in addition to your management, staff structure and salaries.
Getting your price structure spot-on is no mean feat, but doing a thorough job of it will enable you to spot any potential problems and lessen the chance of falling short of your profit margins.
Of course, mark-ups vary from industry to industry, so do your research – sadly, it’s not as simple as undercutting your closest competitor, so make sure you look at the bigger picture!
You could have just invented the most ground-breaking product of the last two decades, but if your financials don’t stack up, nobody will touch you with a bargepole (how many Dragon’s Den hopefuls crumble at this stage?)
Include details of all your monthly costs, forecasted sales and profit and where you intend to source this money from – for the first three years of trading at the very least. You also need to divulge your own personal living costs and whether you’ll be taking a salary initially, or living from savings or your other half’s earnings.
Finally, it’s important to outline a back-up plan if things don’t quite work out the way you’d planned. How are you going to get by if sales are a lot lower than you anticipated? Of course, you can’t cover every single eventuality here, but you need to prove you’ve thought it through long and hard.
Writing a solid business plan not only acts as a blueprint for your company, but highlights to others that you are a strong contender for that all important slice of the market. Once it’s finished, try to put yourself in the shoes of a potential investor and pick out any areas of concern that they may have with your plan.
After you’ve tweaked it to perfection, you should have someone you can trust to check it over and ensure that it’s ready to hand out to any potential investors. Good luck!