6.02 – Writing Up Your Business Plan
Creating an effective business plan is essential for standing out in a competitive environment where more than 1,000 businesses start up in the UK each day. Here are some guidelines to ensure your plan attracts attention and succeeds.
Defining Your Readership
A business plan is more effective when tailored to its readers. Bankers prefer certainties and steady growth, venture capitalists look for potential, and business angels want to know how their skills and talents can be utilized. Researching your readers’ interests and preferences before finalizing your plan helps you craft a message that resonates with each audience. You might need slightly different versions of the business plan for different readers, but the core elements should remain constant.
Creating the plan
While no universal format exists for a business plan, certain styles and structures have proven more successful. Here’s a robust format that covers most requirements. You may need to adjust some sections based on your specific needs.
The Cover
Include the name of your business, website, social media pages, physical address, phone numbers, email address, contact name, and the date the plan was prepared. Confirm that this document reflects the current view of the business’s position and financing needs.
The Title Page
Repeat the cover information and add the founder’s name, address, and phone number. Including a home phone number can be helpful for investors who work irregular hours.
The Executive Summary
This should ideally be one page, but no longer than two, containing highlights of your plan. It’s the most critical part of your business plan and must be done well to engage the reader. Include:
- The current position of the company and past trading results
- Description of products or services, competitive advantage, and any rights or patents
- Reasons customers need the product or service, market size, and growth potential
- Summary of sales and profit forecasts, short- and long-term aims, and strategies
- Amount of money needed and how and when the financier can benefit
The Table Of Contents
Provide a clear and organized map of the business plan. Number each main section and sub-section to help readers navigate through the document easily.
Details Of The Business
Include a brief history, performance to date, key staff and their work experience, current mission, legal entity, capital structure, and professional advisers.
The Description Of Products And Services
Detail products and services, their applications, competitive advantage, proprietary position, state of readiness, and development cost estimates.
The Marketing Section
Provide an overview of the market by major segment, explaining the current and proposed marketing strategy, covering price, promotion, distribution channels, selling methods, location requirements, and any need for acquisitions, mergers, or joint ventures.
Information On Management And Staffing
Detail current key staff, recruitment needs, staff retention strategies, reward systems, and training plans.
The Operations Section
Describe how you produce your products and services, fulfill orders, assure quality standards, and meet output requirements.
The Summary Of The Key Financial Data
Include financial ratios and describe the key controls used to monitor and review performance.
Include Financing Requirements
Outline the financing needed to achieve your goals, the duration of the funding, and how the business would proceed with internal funding alone. Highlight what additional funds will help achieve.
E-Commerce
Explain your approach to e-commerce, including online sales and activities that enhance business efficiency, such as supply chain management and customer relationship management.
Include Major Milestones
List major milestones with dates, such as testing prototypes, filing patents, or locating suitable premises.
Risk Assessment Features
Anticipate potential risks and outline your solutions to address them.
Detail An Exit Route
Detail an exit strategy for venture capitalists and business angels, showing how much money they can make and how quickly.
Long-Term Investment
If long-term investment is needed, discuss potential buyers for the business and the possibility of launching it on a stock market.
Appendices
Include CVs of key team members, technical data, patents, copyrights, designs, details of professional advisers, audited accounts, consultants’ reports, market surveys, and details of orders on hand.
Writing and Editing
The first draft of the business plan may be rough and involve multiple authors. Consult legal advisers and friendly bankers or venture capitalists for feedback. After revising the first draft, focus on editing for grammar, spelling, and consistent style. Aim for a clear, concise, and complete plan no more than 20 pages long. If necessary, seek help from professional editors through local resources or websites like People Per Hour and Upwork.
Checking Readability
Use tools like the Fog Index to ensure your business plan is easy to read. Short sentences and simple words improve readability. Microsoft Word and online tools like the Gunning Fog Index can help you evaluate and improve your text.
Visual Appeal
A visually appealing business plan helps retain the reader’s attention. Use good layout practices, readable fonts, and incorporate images, charts, and graphs to convey information efficiently. Ensure the plan is well-packaged, ideally with spiral binding and clear covers for durability and ease of use.
Confidentiality and Due Diligence
Investors may request sensitive business information, so consider using confidentiality letters or non-disclosure agreements (NDAs). Due diligence involves a thorough examination of your business and its owners, often requiring detailed scrutiny by accountants and lawyers. Be prepared for this process, as it can take weeks or months.
