The best business plan format is one simple enough to be easily understood by all, detailed enough to be useful, and conservative enough to provide a margin for error and changing times.
When writing your business plan always keep in mind what you are trying to do – list out your business objectives, time frames, the research you have done and the strategies you will use to achieve your objectives in a realistic way.
Set Clear Goals
The best business plan format begins by setting concrete goals with clear cut operational areas, responsibilities and deadlines. Make sure that this is very clear and there is no overlapping of responsibilities and that deadlines are based on real conditions and not on what you would like them to be.
Provide reasons for all the actions required. It’s not enough to say that you need to set up a new website. The plan must give reasons why.
Keep Your Business Plan Clear and Concise
The next part of the business plan format should define the product or service you will be dealing in detail. This should include how and where the product or service could be used, by whom and under what circumstances. Are there any ancillary uses for the product or service? What is the competition in the market?
Cover as much ground as you can, but remember to keep proprietary information to yourself. For example – things like how your product is made. Other people will be reading your business plan, and you don’t want your confidential information being seen by others. At the same time you need to provide enough, to show that you are different from your competition and your product or service has the strengths to succeed.
Analyze Your Market
A good business plan format will next cover a marketing analysis. Here you will give in detail how and why your product is needed. Your value proposition is needed.
Where is your market? Who else is there? How successful are they and why? Who has tried and failed and why?
How you are different and what are the strengths your business has that give it a great chance of success? How will you implement your value proposition?
How do you plan to grab a market share? How much do you expect to get? Do not use terms like hard work, grit, determination, guts or other words and phrases that have an emotional appeal or tinge to them.
The business plan format must be based on facts and facts alone. A banker who reads about how hard you will work to succeed will think you have only intentions and nothing else to offer. As far as possible quantify everything you can by using numbers.
Make Your Strategy Clear
Based on everything that has gone before, you now have to detail your plan to succeed. How long will it take? What are the resources you will need? What are the contingencies you are prepared for? How will you measure your progress? If things do not move as fast as you expect, what plan do you have to overcome this, if possible. And if your business succeeds far better than you anticipated, how will you capitalize on it?
Everything that you need to do, every step you will be taking needs to be put down here along with the time frames. Once again, make the responsibilities clear and make sure that the communications routes are defined so everyone knows how to provide information, as and when required, and to whom.
Define Your Projected Profits
The last section is your bottom line. Literally! This is where you go into your financial statements in detail. A winning business plan format will have your profit and loss details, cash flow planning, balance sheet, break even analysis, business ratios and also explain and justify every assumption you have made.
Utilize monthly projections for the first year and then two additional annual projections. Most lenders want to see this detail and it’s important for you to know.
Use charts and graphs to convey the key numbers. Spend time on packaging this. This is the section that will play a key role in whether on not you get the money you need for your business. Do not make overly optimistic projections. Financial experts will see through this, and your expectations for the business will be unrealistic.
As your business begins to take off, keep revisiting your business plan and prepare new modified versions of it if conditions demand. But never change your original plan. That is the soul of your business.
Business Plan Do’s and Don’ts
- Make sure your plan is as complete and detailed as possible.
- Prepare your plan section by section and then go back and modify if needed.
- Research as much as you can and acknowledge your sources.
- Get an expert or two, to go over your plan and find faults or areas of improvement.
- Include your plans for dealing with adversity and the unexpected.
- Package your plan properly. It is a tool to get you investment and financing and needs to look good.
- List out your personal strengths and weaknesses as well as those of people who will be working with you.
- Be completely honest in everything you put down. The people you may need to approach for financing or investment are not fools. If they were they would not have the money you need. If they think you are either covering up something or inflating things to make them look better, they will walk out.
- Ignore weaknesses. Face up to them in the plan.
- Make your projections, too long term. One or two years is the best.
- Project yourself as being someone you are not. You will be found out.
- Forget your research.
- Depend only on the greatness of your product or service. No matter how unique or wonderful it is, the market has to be willing to accept it. Never ignore this fact.
- Be scared of testing your plan if you can. The sooner you know what the problems are, the sooner you can fix them.
- Think you can start a business and develop a business plan as you go along. That’s a sure way to disaster.
Follow these steps and you will have a business plan format that will aid in funding the business start up and give you the road map you need to succeed!