Evidently, a sound business plan can mean the difference between a company that prospers and one that flops. A good business plan communicates accuracy and credibility, and generates enthusiasm for your business. Thus, your plan should be thorough, professional, and realistic.
Hence, in drafting your business plan, the following guidelines will aid you immensely.
General
- Your plan should be concise (30 to 40 single-spaced pages at most, not counting appendices).
- Your plan should be easy to read and understand, without typos or grammatical errors.
- Your plan should convey large and profitable market opportunities for the business.
- Your plan should convey the strength and depth of your management team.
Don’ts
Here are some tips on what not to do in drafting your business plan:
- Don't make unrealistic assumptions.
- Don't underestimate the difficulties in growing a business.
- Don’t underestimate competitors.
- Don't assume that the reader knows industry technical jargon.
- Don't include long, tedious or overly technical information.
- Don't include highly confidential or proprietary information.
- Don't avoid discussing the risks to the business. This may detract from the plan's credibility.
Standard Business Plan Format
The form of every good business plan, although not set in stone, tends to run along the same basic lines, containing the following key sections:
Cover page. The cover page should be professional and informative and should contain an appropriate confidentiality legend.
Executive Summary. The executive summary is the introduction to your business plan and the most vital section. Although it comes first, you generally write it last because it summarizes the entire plan. Effective summaries generally cover:
- The company's origins.
- The product or service and its uniqueness or competitive advantage.
- The company's goals.
- The market potential for the product or service.
- A three- to five-year summary of key financial forecasts, especially sales and profit/loss. For new businesses, do some market research and make realistic assumptions about how your business can compete.
- The management team and its track record.
- The financing required to grow the business.
- The exit strategy.
The company description. This should convey a sense of the history of the company, as well as its goals. You should also include a summary of the company's principal objectives — both long-term and realistic interim goals.
Management. The management section of the plan identifies key members of the management team, describes their individual responsibilities and establishes their relevant experience and accomplishments.
The product. If the company is selling a product, this section describes what the product is or will be and shows why it can penetrate the existing or developing market.
The market. You must convince prospective investors that the company's market is large, growing, and receptive to your products or services.
Competition. The competition section of the plan identifies competing products and technology.
Marketing. The marketing section of the business plan should describe the company's marketing plan and strategy in as much detail as possible.
Financial statements and projections. The body of the plan should include a summary of the key aspects of the financial forecasts, which appear in more detail in appendices. These may include total cash requirements, the time frame for positive cash flow and the anticipated growth in sales and profits.
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