A simple business plan is more likely to be read, more likely to be used, more likely to be successful. Here we will look at some of the keys to a great business plan!
How to structure a simple business plan.
A business plan is not just a list of everything you will be doing to make your business a success. Besides the “How’s”, the plan should also contain the “why’s, when’s and because.”
What does this have to do with the success of failure of your business, you may wonder? The answer is that you need to have something that will always remind you of the big picture and where you are heading, so that you do not mistake a rest stop for your destination.
In addition a simple business plan will be read by others, and they need to clearly see the “why’s, when’s and because.” Some of those readers may be your business start up funding sources.
A simple business plan is still comprehensive.
The plan needs to be comprehensive – warts and all. Your business plan has to be complete in every detail, including facing up to threats and weaknesses. Threats will always exist and ignoring them does not mean they will ignore you and your business.
Better to plan and be prepared for everything. In addition, a simple business plan must be readable, clear, concise and follow a logical progression, with one section leading to the next. Let’s see 12 key steps how.
Write your business plan in logical stages:
- Background details – Begin the main section of your simple business plan by going into a bit of background. Furnish details how your business started (if it is an existing one) how it has progressed and why you want to venture into the path outlined by the business plan.
- Provide a summary of the current status of the business – growth, financial statements, products, market share and other relevant information. Try and use charts and graphs to make it easier to read and remember.If you have been through bad times, do not hide the fact. An expert on your industry who may be called in by investors will wonder if something is not kosher if things look too good to be true.
- Expand on your goals – why you want to take up this business. Is it to start a new business, diversify existing business, or purely to expand and make more money?If you have an existing business, explain how you plan to ensure that the activities of the new business will not affect the ongoing company operations – there will be no reduction of manpower or resources for the existing lines of work.In case, you are stopping an existing line of business to take up a new one, be clear and direct about why you are changing the nature of your operations. Do not try to conceal any facts in case your existing or last line of business failed. Explain why it happened and what you have learned from it.
- Detailed Biographies – Next provide biographies of the management team and provide an organizational chart of how it will be after the new business takes off. Also, mention how many new hires you will need and why. Give details of the people you have contacted who are ready to come on board and what will be their responsibilities as well as who else you will need and where you plan to find them.
- Your Product or Service – Your next step would be to go on to a detailed description of the product or service you plan to offer. What makes it salable? What are the unique strengths?Keep confidential product or service information to yourself, unless you have an appropriate nondisclosure agreement in place. The business plan will be read by others, and you don’t want your product secrets revealed. Give only information that is relevant.
- This is a simple business plan, but the next section is a crucial one – what is the market potential of your product or service. Go into all the depth necessary here. How will you achieve it? What is your competition? Who has succeeded and why? Who failed and why?This is one of the two sections that bankers and investors will study in detail, and may get an expert to comment on so you need to have everything clear and concise and backed by hard numbers as much as possible. You will need your research to be perfect.What is the long term growth potential for this market? What is the geographical area you intend to cover? If it’s an internet business are you going to operate without boundaries or are there operational constraints that will limit you? How will you deliver your goods or service? What kind of customer support or back up will you need to maintain and how will you do it?Use the internet and do as much research as you can, cross checking your sources as much as possible. The internet is full of conflicting information and someone assessing your plan may have come across different data. You need to be prepared to defend all your research and the assumptions based on it.
- If your market plan is complex use the preceding section only for giving the background and the next one for detailing the marketing plan itself.
- Marketing & Publicity – Provide details of how you will introduce your product or service. What kind of publicity are you planning? What kind of marketing and publicity tools will you use? This is where you should give details of your marketing budget with stage wise breakups.
- Overall business strategy – your production, delivery, service and warranty plans and everything else connected with the business. How, what, when, why and where are the questions you need to answer on all these issues.This is where you will also give the project milestones by which progress will be monitored. This is a crucial aspect of the business plan since not only you, but any investors or lenders will want to constantly evaluate your progress and have clearly laid down targets that give a clear picture of whether or not the plan is meeting its goals.Be realistic in the targets you set. Setting soft targets you will easily attain, will not help you to make a success of your business. Neither will this impress any experts who may go through your business plan.But setting over optimistic targets will hurt morale and upset investors and lenders when they are not reached. Be realistic in setting your milestones. It’s for your own good.
- Present your financial statements – All the financial aspects of the plan including cash flow, projected profit and loss, business ratios and projected balance sheets and detailed income statements, and other financial projections need to be made here.Even though this is a simple business plan, this section often by its nature isn’t. Typically three years worth of projections will be needed. The first year should be projected on a monthly basis and the following two years on an annual basis. It may be wise to involve a CPA or other professional to assist you or review the projections.Your income projections have to be carefully developed and presented so as not to give the impression of being over optimistic. This is both for your benefit and for the benefit of the investors or lenders. A simple business plan should present a clear picture of how the lenders will be repaid and what kind of returns the investors can expect.
- The final section of your business plan will contain details of the funding you will need to carry out the plan. How much will you be raising from your own resources? How much do you want as borrowings and how much in the form of investment from others? Why have you decided on these levels of debt and equity?
- Executive Summary – After you finish the whole business plan, go back to the beginning and write out the executive summary. This is where your writing skills will be tested.Lenders and investors will need to be convinced as to the viability of your business plan, within the first page or two that they read, or they will not take the trouble of going any further.You need to be accurate and summarize what’s good about your plan and why. Numbers are important, but don’t overdo this as the reader should not be left with just a series of figures in his mind. You need to combine the facts with your business vision to create a compelling and simple business plan.
Be prepared to answer questions.
Remember that when you present your business plan to investors and lenders you will be questioned both on the research you have done and the facts you have used as givens as well as the projections and assumption you have made.
Have records of every research source you have used and of how you made your projections and assumptions. You can’t put everything down in your business plan or it will become awkward and difficult to read. Nonetheless, you need to have all the information with you to answer any questions you may be asked.
Get expert help if you need it.
It’s a simple business plan, but if you feel you do not have the expertise to prepare any part of the business plan yourself, it’s worthwhile to spend some money to get and expert to help you. Just be sure you understand what they are doing and why they have reached their conclusions, so you can defend them if you need to.
Make sure the plan looks professional.
Finally, there is one aspect of a concise and simple business plan that I have often seen people ignoring. That is the physical appearance of it. Sure it’s the data inside that counts, but let’s face it, this is your tool to sell your business plan.
Taking some trouble to make sure it is presented in the best and most attractive (but businesslike or professional) way possible will create a positive first impression among people. And first impressions do count.