Writing a business plan?
Great, that’s what this site is all about.

Why is the business plan said to be of so great importance in a business? Why is it such a controversial issue? Why are there opinions that diminish its importance?

In the following you will see that the existence of a business plan is valuable and required sooner or later for small companies as well as for big, important ones, for starting a business as well as for helping it grow. You’ll also find good resources to help you build a strong plan.

Good luck!

Why is a business plan of such central importance in a business? Why is it so controversial? Why do some people seek to downplay its importance?

Surprisingly, others would claim that a business plan has no value. We can immediately dismiss this view as without any logical basis. Every single activity, from one day’s work to longer-term projects, requires planning, investigation and analysis.

A business plan is a valuable tool, required both for small- and medium-sized companies as well as for major corporations, whether they wish to start a business or to help it grow.

When managers put down on paper the data necessary to create a business plan, they are forced to organize and structure their business ideas. The business begins to take shape. A written plan reveals complex aspects of future work or work in progress.

Synthesizing all the data needed and structuring them into a specific business plan is not a task to be undertaken lightly. A guesstimate analysis is required, to take existing data into account and keep within reasonable bounds. While it may take up to several months to formulate a viable plan, once accomplished, it will bring about real, important benefits.

Three Reasons Why Any Business Should Have a Business Plan

• A business plan is an effective tool for defining the existing realities. It prompts you to analyze your business project or the existing situation objectively and critically, define a focus and set realistic goals. It may also constitute the basis for control and evaluation.
• A good business plan will reveal weaknesses or omissions in your planning. Because good business plans require a guesstimate of risk calculation, they help to reduce risks.
• They provide a valuable communication tool presented in an organized, credible manner, which allows lenders, outside directors, investors, banks and employees to obtain a complex view of your business. Even if, in some cases, a business plan format is not officially required when applying for a loan, although most lenders will ask for one, the very existence of a plan constitutes a plus, a step forward in obtaining the loan.

Why Do You Need a Business Plan?

We have established that it is highly important for companies to have a business plan. In the multitude of firms and companies, there is a way to stand out: a successful business plan.

So, what is the recipe for writing a business plan that impress? The art lies not only in the content but in the way it is presented so as to result in a professional, convincing material.

The first requirement is a general one, that should be used in the case of any written (or spoken) statement: in order to transmit information in a coherent, appealing manner, the business plan writer should observe the main principles of discourse. These are: clarity, brevity/conciseness, logic and truthfulness. In order to gain consistency and credibility, the presented information should be backed up with figures whenever possible.

The second main requirement when writing business plans is that you always have to keep in mind the target readers of your work and thus putting emphasis on their particular points of interest. But this stage is a customizable one, that will be grafted on a basic common structure.

Content

Most significant aspects that should be dealt with when writing a business plan:

• A presentation of your business and products;
• A market prospect in the specific area;
• A marketing analysis of the product’s/service’s competitiveness;
• Information on the firm’s management team;
• A financial survey of your business.

Usually, business plans have the following components:

• Executive summary
• Company description
• Product or service
• Market analysis, marketing, sales
• Strategy and implementation
• Management team
• Financial analysis

What to think of for writing a business plan of success: Manner of Presentation plus Plan Purpose.

Beyond content, a business plan needs more to convince: a presentation to arise interest.

A successful presentation can be achieved by taking care of format and accent on the important aspects.

Format

Try to write the business plan in the simplest and clearest possible way, usingsimple language, short paragraphs, not too many ideas in one sentence.

Limit the text to strictly meaningful essence.

Link paragraphs and ideas logically to one another.

Maintain your previsions realistic within reasonable limits.

Put an emphasis especially on figuresbehind words, as they prove a pragmatic mind, inclined towards putting theory into practice.

Granting a Purpose to Your Plan

Obtaining the expected result from presenting a business plan depends very much on the skillfulness and knowledge you can put in highlighting the exact matters that interest your reader. This means understanding and visualizing your business in its most intimate details, so as to be able to present it from different perspectives. Then, there is some psychological research you have to perform, that is, you have to get to know your targeted audience, so as to respond to what they expect to find in your plan.

Supposedly, you know all the ins and outs of your business. The part you should learn about is your audience. How many types of readers can a business plan have? What does the audience expect to find in a business plan?

Usually, a company has more versions of a business plan, according to the use managers put it to. There is no fundamental difference between versions, but their stage of completion. The starting point when writing a business plan must be thedraft of the plan structure or the so – called miniplan — here the main directions are drawn in rough lines. It is an abridged version of the full-length plan, dealing in short with all the aspects of the plan. It will be used as a basis for more elaborate versions. It can be used as a tool for testing the business concept or the interest of an eventual investor. It cannot be used as a replacement for the whole business plan.

Secondly, you have to write working versions of the plan such as internal plan, operations plan, strategic plan, in these plans the structure gets a complete form dealing especially with the concrete aspects of the business — marketing, product planning, financial part, forecasts, milestones, assignments — and less with the part of presentation. It is used as an internal tool for control and analysis. This type of plan cannot replace a formal business plan either.

Finally, there is the formal plan or presentation plan, a plan that will be used for company presentation to external partners. This is the version of the plan that should put your business in the most appealing light possible.

Presently, it is essential for the formal plan to be available also in electronic format,so it may come at hand for computer-supported presentations or electronic data transmission.

The presentation plan is the most complete one, the most professional-looking one, the one that should be treated with all the attention and taking into consideration all aspects, from spelling and formatting to covering, in an exhaustive manner, all aspects of interest in a business by “clothing” everything in the most valuable “garment” you dispose of. Presentation plans might have several versions targeted differently.

Examples:

• start-up plans for opening a business. They are built on the standard pattern, might be bank-directed when applying for a loan.
• growth plans — usually imply investment, so are investor-directed or bank-directed.
• feasibility plans, proving that a business is worth pursuing.

Writing Business Plans that Result

This article is not a miracle recipe for developing the best possible business plan imaginable. This depends on your own ability to present all aspects of your business realistically, to stress your strong points and to anticipate solutions to specific problems which might arise.

Here we suggest the conditions to be fulfilled in a business plan in order to make it more profitable, approachable, convincing and easier to implement. Then we will briefly survey some aspects of a business plan we would not recommend.

Here is what you have to keep in mind whenever you are trying to find answers to the well-known “beginning questions” as “How to write a business plan, actually?”

Dos

• Keep it simple. A business plan should be easy to grasp. It should communicate its content in a throughly practical manner.
• Be specific. Draw up concrete objectives. Specify each activity with a completion date. Assign responsibilities.
• Keep it realistic. When you set out sales goals, milestones, capital requirements and profits, err on the conservative side.
• Make it complete. A good business plan includes all the elements needed.
• Emphasise the uniqueness of the products and services you are offering. Use the “Unique Selling Proposition” (USP).
• Specify the market you wish to target. Show that you are aware of the competition.
• Use straightforward language, not too technical. Vary the format to prevent your reading falling asleep.
• Complete the financial data as you proceed through the plan. In this way keep the figures strictly linked to the business plan. Stay within realistic limits.
• Specify each implementation technique for each part of the strategy thoroughly. To optimize implementation, designate a section for review and corrections.
• Submit your plan to experts for evaluation before sending it further on.
• Use software templates to make your job easier.

Don’ts

• Avoid over-optimistic sales and costs estimates.
• Do not ignore the weaker aspects of your plan and the possible risks to your business.
• Include a monthly cashflow analysis for each year.
• Avoid overloading yourself with too many tasks. Hire specialists to help you improve the overall quality of the text.
• Do not focus excessively on the future. Always ground your estimations on solid analysis.
• Always relate the projected investment to concrete plans for business growth.
• Spelling matters. So does formatting. If you cannot spell properly, you undermine the selling potential an believability of your plan. Poor formatting will lead to boredom.
• Do not overload your business plan with too many details and technicalities. Keep it short. Total length should be no more than 50 pages.

How to Write a Business Plan of Success

When making a business plan outline we cannot provide the magic recipe that will work for every plan. We can only mention the main areas to be covered and analyzed. As a previous article shows, business plans differ not in essence, but in form, according to their application.

Focus of a Good Business Plan

• summary
• mission statement
• competitiveness of product or service on the market
• principal steps required to ensure success
• market analysis
• financial analysis revealing a first-class break-even analysis

Investors will also interested in an exit strategy. An exit strategy gives the investor the assurance that he is dealing with a responsible entrepreneur who has calculated the risks and offers a guarantee for recovery of the financial outlay. Many business plan outlines contain such a strategy.

The expository section should balance the prospective section, to highlight the main points of interest.

Standard Business Plan Outline Sample

1. Executive summary, an abstract of the entire plan. This must present:
   • the mission of the company
   • the proposed objectives
   • a brief description of the product or products
   • the people behind the business
   • a step-by-step plan for success
   • a profit forecast
   • an estimate of the funds necessary
   • a well-phrased request for funding
2. Company description
   • ownership
   • a start-up plan for new companies and a company history for existing companies
   • location details
3. Product or service
   • brief description of product or service. If possible, this should be non-technical
   • competitiveness on the market
   • technology
   • prospects for new future products or services
4. Market Analysis Components
   • market size, needs, trends
   • customers
   • competitors
5. Strategy and implementation
   • strategies planned
   • marketing strategy: pricing, promotion, distribution
   • sales strategy: forecast
   • assignments and milestones
6. Management team
   • presentation
   • gaps
   • personnel plan
   • expansion plans
7. Financial analysis
   • key indicators
   • break-even analysis
   • profit-and-loss forecast
   • cashflow forecast
   • balance-sheet forecast
   • business ratios
   • long-term plans and risk analysis

The organization of your own business plan may well follow a different order from the one presented here.

Business Plan Outline and Content

If you present a strong management team successfully, you may bolster your business plan, by showing that you can apply your good ideas and theory in the practical world. You will achieve a presentation of this kind by stressing those management skills at your disposal which have the greatest focus on your business and activities.

Three key elements in the presentation of your management team.

• The management-team summary surveys the principal roles of each team member. It may also refer to your future plans, for example, projected hirings.
• The organizational structure specifies the hierarchy and outlines responsibilities and decision-making powers.This is also an opportunity to provide a mission statement and describe the working environment you are aiming for.
• In the management team-section you set out the skills and track record of the company managers. You may also offer details about key employees, pointing out qualifications, experience or outstanding skills, those qualities which will add a competitive edge to the image of the business.A paragraph enumerating the business expertise of your staff would be absolutely appropriate. This might include special knowledge of budget control, personnel management, public relations and strategic planning.Reveal plans for future training courses or any other measures to improve your the skills of your personnel skills. Make it clear that you plan to offer them the opportunity to acquire new information and knowledge, that they will be able to develop their value on the market.
• In the personnel plan describe your personnel structure and long-term plans for staff, as well as the financial aspects they involve. Specify payroll costs, as well as other possible future costs.

Management Team

This section describes what your product or service consists of. It should contain detailed descriptions of products and/or services.

Make the presentation explicative, as if addressing a reader who is not familiar with the offered products/services.

Product description: should cover size, shape, color, design, capabilities. Representative pictures might be helpful in retaining the reader’s attention. Also add a brief description of the production technology (needed materials, type of labor) and some things on patent protection.

Services: explain the services — what they are, what needs they address, the operations area, needed materials or equipment, operations program(scheduling — days, hours), steps in the service process, benefits for clients.

A competitive comparison of your products should be performed here, showing your key advantages towards your competition.

For both producers and services providers, the sourcing analysis should be represented here. It shows that you have considered and analyzed the necessary means to fulfill your objectives, that is the products/services you offer. Elements to be analyzed: standard costs, materials, manufacturing operations (purchased services if required) from the strengths and weaknesses perspective.

A presentation of the technology you use in order to produce/maintain/develop your products/services will speak about your ability to put to good use facilicities offered by modern science and about your openness to new.

You may also want to present future products or services future planning. It implies describing a product strategy, how you see the relationship between market needs and product development. This topic would mostly appeal to possible investors, who look for the business’ perspective than to bankers who would not be interested in ideas of future products but in more concrete things.

The business plan writer should treat this subject from the perspective of the customer’s needs and the potential of your product of benefit offers. This chapter is decisive for the wholistic impression of the reader — whether the business/company has anything interesting to offer, something that will sell, something that will retain attention and seem attractive.

The section must be informative enough, offering an easily understandable image without boring details. Emphasis should be placed on the difference your products or services make on the market.

If you expect the business investor to come up with the money, you need to buy his confidence. If you have an organized mind with well-defined plans and ideas about your business, all you have to do is to turn them into winning business plans.

Let us come back at the beginning: in previous articles we saw what a business plan is, and how to write one. The skill here is to customize it. It must offer a solid perspective which appeals to investors.

On one hand we have all the data we need to build a business plan: the description of the company, the characteristics of the product or service on offer, the market analysis, the plans for implementing your strategies, the data on your team of managers and all the relevant financial data. The necessary strategic qualities will beconciseness, organization and emphasis.

Conciseness and Detail

Concentrate a great deal of information in a concise text, shunning plans which extend over hundreds of pages. The plan should start from the premise that the reader knows nothing about your business. No busy investor will have the time to read a massive volume. He or she will simply not be prepared to plough through the technicalities of the writing.

Organization

Structure the information well. Balance the text, the figures and the graphics. Good formatting will capture attention. Start with a well-written executive summary, concentrating all the essential data in an optimistic, compelling form.

Emphasis

Stress the parts of maximum interest for an investor — the profit perspectives and the low rate of risk.

Company Strategy on Marketing and Sales

Within the existing market environment — the perspective of the company and product. The business plan should describe the market and the competitors, placing your own business in the context and revealing your competitive edge. It must specify market share and market trends. Present the sales, marketing and pricing strategies so as to show how these will influence the growth potential of your product or service.

Management Team

The means to implement the strategies. The description of the team should express competence and commitment.

Financial Analysis

The financial resources of the company, profit perspectives and potential return on investment. The data should support the details of the business plan to be credible. It should reveal the true potential of the plan.

Possible Risks

Clearly state the risks and uncertainties in your business to avoid unnecessary litigation. An exit strategy reassures an investor and acts as the final pro-investment argument.

The Business Investor

Let us try and get to know him or her in order to train our “selling” abilities. If we cannot make his or her personal acquaintance, let us at least imagine what we should expect. There are two main categories of business investors: the “angel investors” and the “venture capitalists”.

Angel Investors

They are also called “Bank of Mom and Dad”. People or entities who are willing to invest in a startup business for a percentage of the equity. Angels tend to invest in businesses they understand or participate in. An “angel” is usually directly interested and wants to take part in the business activity.

Main Concern

They wish to have their money back.

Business Plan

If you happen to know the investor personally, your business plan may not have to be perfect. If the investor is not a personal acquaintance, the business plan should focus on his interests, which specify how the investor will safely recuperate his money.

Venture Capital Investors

People or entities willing to invest in a highly profitable venture already in operation, with realistic possibilities of fast growth within around five years.

Main Concerns

A high rate of return, minimum risk for his investment.

Business Plan

To capture the attention of a venture capitalist, your business plan should aim for perfection, as this kind of approach is made daily by dozens of other entrepreneurs looking for investment.

The Business Investor

It is commonly known that requesting a loan bank for business loans means thoroughly preparing your business documentation. Thinking from the banker’s perspective, you will definitely consider the risks implied by a business loan and agree that a complex set of documents is necessary, documents that will provide proof of loan repayment.

Often, business loan applications are rejected for not being very well documented and for not being specific enough. In order to be taken into consideration, such requests should have annexed concrete proof that your business is a good credit risk.

Besides the required statement of your personal financial status (containing data on your assets and debts) you will most certainly need a well constructed business plan. Even if not on the loan required documentation list of some banks, the existence of a business plan will play to your advantage and will be appreciated by all means.

Bankers will look for loan amounts, repayment terms, risk assessment and planning and collateral. All these can be clearly highlighted when writing the business plan (possible exception being the collateral if you decide to put up one of your own possessions, but not necessarily, as it may be constituted by buildings or equipment that are registered as firm’s assets).

Business bank loans plans must have a well prepared financial section. The cash flow analysis must be clearly represented, as it is the first thing that will interest the loaner. It must imply the clear idea that there will be enough cash on hand to permit repayment of the established loan parts. (The cash flow analysis — in which it could be seen what has been going on with the business’ cash up to the reference moment – may be also of interest but can be used only in the case of ongoing firms).

And the need for a business plan will not derive only from the necessity of financial background. In the business plan, after expressing the requested amount you will link it to the plans you have for developing your business, in other words you willspecify what you need that loan for.

Obtaining bank financing is definitively a skill, depending very much on the personal impact of the business owner on the bank officer who will decide upon granting the loan.

The applicant must fulfill certain eligibility personal qualities: a good characterand management expertise. Particularly, the management section of the business plan will reveal the qualification and abilities of the management staff in the specific business field they operate (or planning to). Also, the chapter on marketing should highlight the commitment of the business owner to provide assurance of a successful business operation.

Other documents that might be annexed as useful: past business tax returns (for ongoing business) or a credit rating report — showing the repayments you have done at purchasing things on credit.

Business Bank Loans

Business plan reassessment leans on reevaluation and analysis. Experts consider it must take place with a frequency of six months to one year. This timescale, however, must be adjustable according to the dynamics of the market and to the kind of business you are in. It depends also very much on the application of your business plan.

• If you use the plan as a business development tool, it may be convenient to design the reassessment plan more frequently.
• If the business plan was built in only as a part of a presentation to an external partner, it will probably be revised whenever necessary.

If you use the business plan as a communication tool, you will not need to update it so frequently. A review once or twice a year will suffice.

If frequent revision of the business plan appears to be more profitable, you will be using the business plan as a tool to help you fulfill your current activities. Keep in mind a general, holistic image of the business and its long-term and short-term goals.

• Thus, the business plan can be reevaluated, say, every month. This squashes any potential problems at an early stage. Recovery is more straightforward and there are no unpleasant consequences.
• Keeping your business plan under close observation may also reveal, and help you anticipate, new tendencies on the market.
• Another advantage of updating the business plan frequently lies in the detailed written record of the development of your business. For many investors or bankers this will constitute proof that your business management plan is clear-eyed, calculated and responsible.