It's not only essential for attracting future funding and investment, but it also enables you to monitor progress and accountability.
Reviewing your business strategy regularly forces you to evaluate your value proposition, marketing assumptions, and operations, financial and staffing plans.
HOW TO WRITE A BUSINESS PLAN
Your business plan is a critically important document and one of the most important strategic management tools you can have. Give the development of your plan, and a regular review, the time and effort it deserves. Make sure you use language and terminology that investors and other readers fully understand.
You can start with a business plan template if you find it more convenient, but all your plan really needs is a number of key components. Ensure your plan includes at a minimum:
Include the company logo, company name, ABN, full address, all contact details including social media, and the date.
This synopsis of all the key sections of your overall business plan is the most important component of your plan. This is your business pitch edited to perfection. It should grab your reader’s attention immediately, and interest them enough to want to know more.
The executive summary highlights the points you’ve made elsewhere in your business plan, so it’s best to write this last. Don’t include new points in this section. If you’re looking for investment or a loan, specify the amount required, and in the case of an investment, specify the percent of equity ownership offered in return.
"If you’re shopping around for capital, your executive summary should be persuasive. Your aim is to make your prospective investor want to keep reading."
This is the ‘who’, ‘what’, ‘when’ and ‘where’ of your business plan. It introduces your business to an outsider.
Include your company information and history, mission statement, management team, legal structure and ownership, products and services, and your locations and facilities. Think about what you would like the reader to take away about your business and team.
If or when you are seeking investment in your business, it‘s important to clearly describe the investment opportunity.
Why would the investor benefit from investing in your business rather than in another business, or doing something else? What is the business’ unique selling proposition (USP)?
This provides information about the current state of the industry and your unique position within it.
What’s happening that may have a positive or negative impact on your business? What barriers to entry exist in the industry? What is the industry forecast for growth, economic fluctuations, and income projections? What government regulations affect the industry?
Be sure to avoid industry jargon or acronyms so that outsiders can also read this document.
Include the market definition and characteristics including size, growth potential, geography, industry, and a description of the types of buyers or customers. How does distribution occur in the market – through direct sales, value-adding re-sellers, distributors or manufacturers’ representatives?
Who are your target customers within the industry and what are their characteristics?
If there’s more than one customer segment, provide details of each. Segment by geography, age, income, profession, industry, volume vs. unit buyers, and business vs. consumer markets.
Provide as much relevant detail about your target market as possible such as the factors that drive buying behaviour, what they are buying and what they are looking for.
Analyse the strengths and weaknesses of current and potential competitors. Evaluate their marketing, advertising, public relations, website, and social media strategies.
How can you take market share away from their business? Anticipate and account for new competitors. Most investors will look closely at your competitive analysis.
Don’t make the common mistake of stating you will simply "do it better" than any competition.
MARKETING STRATEGY AND PLAN
Your marketing plan identifies everything from who your target customers are, the strategies you have planned to reach them, and how you will retain your customers.
It will describe your target customers, USP, pricing and positioning strategy, distribution plan, special offers, marketing and PR materials, PR strategy, online strategy, conversion strategy, joint ventures and partnerships, financial projections, and referral, pricing, and retention strategies.
Your business model explains how the USP is realised. It includes the specific activities the business engages in to bring products and services to market, how revenue is generated, and the length of lead times, recurring revenue, and main cost structure components.
It looks at how this business model compares to others in the market. It can cover how trade secrets are protected, copyright, trademarks and registered designs, and brief overviews of patents granted. It identifies special technology used in the production or delivery process.
This details all the operational strategies around managing, staffing, manufacturing, fulfilment, and inventory that are required to run your business on a day-to-day basis, in a profitable and productive manner.
It should cover your organisational structure, strategic management plans, staffing requirements, your vendors and supplier relationships, the facilities, equipment, and supplies required, R&D, legal requirements, and how you see your operations changing as the company grows.
This expresses the business plan in dollar terms. It should relate to the body of the plan and reflect the operation and capital requirements of the business.
Include a financial summary and provide detailed figures in the appendices. Provide a snapshot of how the business is financed. Include the total amount of any funding required, what part of the funding is being sought from investors or lenders, what percentage of the business is on offer, and the proposed interest rate and payment schedule.
Include key assumptions in financial projections, quarterly projected profit and loss statements for three years, quarterly cash-flow projections for three years, projected balance sheets and capital expenditure budgets. Prior year financial statements should also be included.
This provides the entire business plan’s supporting documents in a clear, well-organised manner.
Much of the supporting documentation will be included within the body of the business plan. Reserve the appendix for information that supports the business financials, including tax returns, receipts and bank statements, contracts and inventories, and personal and business credit history information.
Also use it for any general supporting documents that are longer than two pages, for example market research information or full financial projections and any additional details, such as patent information, customer lists, graphs and charts.
This article was originally published on Business Australia
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Your business plan is an essential strategic management tool that provides your management team focus and direction.