Wednesday 10 April, 2013
The first step in starting a company is to create a business plan. This is a document that describes your business idea as fully as possible. The idea is to attract lenders and investors. There’s no hard and fast outline that all businesses use, but here are some guidelines to help you write a winning plan.
The Executive Summary
The executive summary is the first two or three pages and it describes in general what your business is about. It’s aimed at potential lenders and investors so it needs to really get their attention. A few things it should include are:
* Your business’s unique selling proposition (USP), or what makes it different from what your competitors offer.
* An executive profile that describes your management team, their skills and their strengths and weaknesses.
* A financial projection that spans the next three years.
* What you require in terms of funding and when you need it.
It’s best to write the executive summary after you’ve put the rest of the document together since it should summarize everything contained within.
Your market analysis takes a good look at the industry and shows how your business idea will fit in. It has two purposes. For you, it’s a way to see what’s going on in your market and how your business will be involved. It has another function too, and this is the show investors and lenders that you understand your industry well enough to compete in it.
The marketing plan describes in detail how you will reach your market and deliver your goods and services to them. Potential lenders and investors won’t give you the money you need unless they’re sure you know how to market your business. Identify the characteristics of your business model that are going to make it a success. Describe in detail how you’ll get it to the market.
Operations and Management
This part may be broken up into two parts – operations and management. The operations section includes the day-to-day business of your company and its basic set-up, including location, company structure, internal regulations, and so on. The management part shows how you will manage the company.
Detailed Financial Projection
The financial projections describe what you’ll need to get started and operate for three to five years. These figures should be as accurate as possible. When you research your industry, you’ll arrive at a good idea of what you need. If you’re not sure, err on the side of pessimism. If financial projections are too optimistic and you turn out needing more, this will not go down well with your funders.
Writing a business plan is a massive undertaking and it doesn’t guarantee you success. But consider it a process. Lenders may reject your business plan but they’ll usually tell you why. You’ll know which parts of it need to be better clarified or changed. After polishing and making the needed alterations, you’re ready to present it to the next potential lender.