Who Will Read Your Business Plan?
We talk to many business owners who have avoided writing a formal business plan because they aren’t sure where to start or what to include. If that sounds like you, it is time to get past the excuses and put a few things in writing. What should your plan contain? To a great extent that will depend on your audience, but every business plan contains these sections:
- Company Background – This section includes history, mission, vision, values, goals and performance to date. Include a general introduction of the business structure, products, services and key team members.
- Market Research – Who are the target customers and what is important to them? What makes key competitors successful? What market trends indicate there is opportunity for success?
- Business Strategy – How will you meet the needs of your target customer? What will your pricing, marketing, distribution and product strategies be? For example, will you try to be the low cost alternative or a premium product? Do you want to be known for innovative products or great service?
- Operations – The strategy section looks at the external side of your business and the promises you make to clients about what they will get when they buy your product. The operations section focuses on processes and resources required to support your strategy. These resources may include things such as training and bonus structure, staffing and facility or technology needs. Will you need to hire new people, expand your space or make capital expenditures to achieve your goals? That information should be captured here. Don’t forget to include a timeline or milestone that indicates what will occur and who will be responsible for critical tasks.
- Financials – The financials should look at both your capital needs ( money to buy equipment) and operating funds (money to cover the day to day expenditures). This section also includes your projected results. If you follow the plan and everything goes right, what will your results be? What are the results if you have a less than successful year?
While every plan touches on all these elements, not every business plan needs the same level of detail in each section. Where you put your emphasis and where you spend your time depends on who you are writing the plan for. Investors, bankers, you, your partners and even employees need different information to evaluate your business and make decisions about investing time and money with you.
Writing for Bankers
If the primary objective of your business plan is to secure financing from a bank, start and end with the numbers. The financial section of your plan will be the section they turn to first. It makes sense to create the projected financial statements first and then develop a plan which will help you achieve those goals. Present your assumptions clearly and consistently throughout the plan. If you haven’t made any sales yet, include compelling research information which supports your sales forecasts. Be sure to include a discussion of critical risks in the operation section. This is not being negative, it is being realistic. Bankers tend to be risk averse, so give them confidence by demonstrating you have thought through some of the worst case scenarios.
Writing for Investors
Are you looking for investors for your business? Most business investors assume any financial projections put in front of them are optimistic, especially if this is a new business. They are more concerned with the business concept than the numbers.
Present your ideas confidently and succinctly. Clearly describe the needs of potential customers instead of focusing on your infatuation with an innovative idea. Prove you have done your homework and thought through the execution details.
Investors will look at the market research section to see if you have solid information driving your business forward. They are also concerned with the people behind the business and want to know what makes them uniquely qualified to lead so spend more time writing compelling bios in the key team member section of the company background.
Writing for Yourself
Is your primary objective is to develop an operating plan to use as a map for success? Spend your time perfecting and growing the action section of your business plan. Business owners tend get bogged down in the introductory sections of the plan and end up burning out before tackling the real meat of the plan; the strategy and operation sections. Action steps are overlooked and impede the growth of the business. Don’t let that happen to you.
Grammar and spelling can take a backseat when you write your first draft. The purpose is to get your ideas on paper so you can review; and update them over time. The best business plans are not beautiful documents sitting sedentary, gathering dust on a shelf. They are tattered and smudgy from frequent use as a road map, guiding you along a path to success.
There has never been a better time to start working on your business plan. Include all of the crucial elements I listed in top of this blog post, but focus your energy on the elements most relevant to your audience.
Looking for a starting point for your plan? Download our free outline or call us for help.