Writing a Professional and Effective Business Plan in 10 steps
Often described as a roadmap to success, a business plan is a written description of your business’s future. Its purpose is to outline what you want to do with your business and how you plan to do it.
The importance of a business plan cannot be underestimated. Speak to any business coach and they will highlight the importamce of a business plan. At some point, you will have to share your plan with potential investors, grant providers and business partners. An effective business plan may be the difference between your business obtaining funding or not.
Follow our guide to ensure you create a focused and in-depth description of your business.
SECTION 1: CONTACT DETAILS
A simple one-pager including name, business name, registered address, phone, fax, email and website.
SECTION 2: EXECUTIVE SUMMARY
The background to your business/idea/product/service; an outline of your proposal; what you’re trying to achieve and what you need from your audience.
SECTION 3: BUSINESS BACKGROUND AND LEGAL STATUS
This should include when the business was started and how it has developed since. Include any milestones or achievements to date. If the business has no background (i.e. a new business), include an explanation of why the business is starting and details of your own background and experience. Include details of the legal status of your business in this section also.
SECTION 4: THE PRODUCT/SERVICE AND THE OPERATIONAL PROCESS
This should include a precise description of exactly what it is the business will be doing, with specific details of any range of products or services. What will your solution do for the consumer and what differentiates you from what’s already available?
If you plan to manufacture your own product, include details of the production process from raw materials to production stage. Also, describe the equipment that will be used and what this equipment costs.
You should also include details of your suppliers here (if applicable). Include a flow diagram and bullet points to summarise the process.
SECTION 5: THE MARKET
- Size of the market (home/abroad)
- Competition details
- Market trends (including figures)
- Price expectations
- Potential customers and what they look like
- Quality standards and relevant legislation
- Market research details
This section will differ according to the sector you conduct your business in.
From this analysis, you’ll formulate the strategy for your new business and identify its USP (Unique Selling Point)– i.e. the key differentiator that will attract customers.
Example details include:
- Why your product is a marked improvement on what’s currently available in the market
- Why your product is a replacement or more cost-effective alternative to existing products in the market
Conduct a market segmentation exercise, by dividing your broad target market into subsets of consumers, businesses or countries. These should have common needs and priorities that your solution addresses and satisfies in a more effective way than the competition.
In each scenario, you’ll need to spell out why you feel that the competition will not simply react with a similar or better solution than yours; you’ll also need to communicate how your business would react should an established competitor (or competitors) start fighting back.
If your product or service is a new-to-market solution, you ’ll need to have a thorough explanation of why the competition won’t just steal your idea. Make sure you at least protect your product or service by copyright, patent or other legal protection (this is why the dragons on Dragons Den always ask about Patents and Copyright – they know the pitfalls of plagiarism).
A good solicitor is essential here. You must be confident that a major competitor, or a company with huge resources, won’t move in and grab the market.
SECTION 6: CASH FLOW SPREADSHEETS
This section of your business plan should include projected profit and loss accounts and balance sheets. These will form the centrepiece of the financial section. Include payroll requirements in this section.
When putting together cash flow spreadsheets, I ’d advise you to look at three scenarios: best, worst, and realistic.
The spreadsheets will need to be referenced with notes and explanations linked to each of its lines. Most investors will have been around the financial block a number of times. They will want you to provide hard facts and proof by way of full and detailed explanations of your numbers. They will then make a full and informed decision based on their own experience. Watching an experienced investor poke holes in the financial projections of an ill-prepared spreadsheet can be brutal. Don’t let yours be that ill-prepared spreadsheet.
If figures and numbers aren’t your forte, don’t worry: our team at Russell and Co. are experts in this field.
SECTION 7: MANAGEMENT AND STAFF
You should plan to present a team that is competent, keen and experienced.
For investors, the most attractive proposition of any pitch is often the people involved – including you. Full details should be included for both current staff and projected staff over the next three years.
SECTION 8: NAMES OF ADVISERS
Include details of your accountants and solicitors here. If applicable, include details of architects and engineers also, along with any other strategic partners.
SECTION 9: RISK ASSESSMENT
There’s a question that all entrepreneurs are reluctant to deal with: “What will I do if things don’t go to plan? What could potentially sink my business?” You need to face up to the worst-case scenario and present details of your contingency plan.
Why not include a SWOT analysis at this point, detailing the Strengths, Weaknesses, Opportunities and Threats to your business.
SECTION 10: FUNDING
This is the point at which you set out all details of existing funding, including your own personal contribution. Investors always like to see that you’re also taking a risk. Additionally, include details of other required forms of funding such as banks loans, overdrafts, hire purchase, leasing and equity from investors, along with details of when these will be required over the next three years.
With all funding comes repayment, and investors will need to see the repayment terms and timing. This is usually presented in terms of retained profit, as evidenced by the profit and loss forecast as outlined in Section 6 above.
To finish up, all business plans should show proposals for the continued development of the business and the exit opportunity for the investors.
How can Russell and Co. help you?
Our expert team have over 40 years experience helping Irish businesses create and implement their business plan. We can offer expert advice and guidance to ensure your business is a success. We also supply a full range of Accountancy Services to assist your company including; Payroll, Forensic Accounting and Insolvency Advice.
Call our office on 021 4963679 or email info@russellandco.ie.