I encourage everyone to have a business plan whether you are a start-up or have been in business for several years. Writing a plan will help you to understand what’s going on in your business and where it is going, and if it even can grow based on your projections. I completely understand that writing a Business Plan is an intimidating process, but one that can be enlightening and really is not that difficult. Writing your plan will assist you to focus your mind to clarify your business idea as well as help secure financial support if you need it. It will also greatly assist you in defining your long-term goals. This will become your blueprint for creating benchmarks to check your progress as your business grows. These are vital for convincing your financial institutions as well as key customers and suppliers to support you.
We have done many plans and this is some of the information you will need to gather for yours:
The executive summary outlines your business proposal. This is the last section to be written, but will feature on the first page of your business plan. It will be read by people who are unfamiliar with your business, so avoid jargon and acronyms.
The executive summary is just that, a summary. It highlights the most important points and should cover the following areas:
When deciding whether to back a start-up, bank managers and investors often make provisional judgments based on the executive summary. The main body of the business plan is then read to confirm the initial decision. The appendices at the back of the plan carry detailed information to support the main text.
Explain, without using tech or industry jargon, what your product or service is.
Your Business or Business Idea must be clear how:
Briefly defined SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses are internal to your company—things that you have some control over and can change. Examples include who is on your team, your patents and intellectual property, and your location.
Opportunities and threats are external—things that are going on outside your company, in the larger market. You can take advantage of opportunities and protect against threats, but you can’t change them. Examples include competitors, prices of raw materials, and customer shopping trends.
Research your market well.
List the advantages and disadvantages of all your competitors and their products.
Explain why people want to purchase from you rather than established competitors.
Show you understand what your competitors’ reaction to losing business will be and demonstrate how you will respond to it.
Sales forecasts produced for start-up businesses are often overly optimistic. You must perform a reality check at this point:
a) How soon can you start?
b) How often will you be able to sell?
c) How many days can you spend selling?
d) How long will each lead take to line up?
e) What is a reasonable percentage of sales?
f) What will be the true value of each sale?
g) Will you achieve repeat business?
h) Are you certain of your products valuation?
i) How much income can realistically be achieved?
Unless there is a viable market and you know how you are going to beat the competition, your business will be vulnerable. You must show you have done the market research needed to justify what you say in the plan.
This section is vital to the success of your plan. It will be a good indicator of your business’ chance of success.
List the products and services that your company will be doing. Most businesses need more than one product or service, more than one type of customer and more than one distribution channel.
Lenders and investors reading the business plan need to be given an idea of why they should have faith in the management of your start-up. Outline the management skills within your team:
Your financial forecasts translate what you have already said about your business into numbers. A realistic sales forecast forms the basis for all your other figures.
Calculate the turnover you need to break even:
$ Breakeven = Fixed Costs over 20% Gross Margin x 100
If your gross margin is 25 per cent, your sales must be four times as large as fixed costs to break even.
For every forecast, list all your key assumptions (eg prices, sales volume, timing). Small business advisers at banks and your local business support organisation will often help you put together your forecasts free of charge.
Most importantly you will need to confirm that you will be able to afford it.
Assessing risk will help you minimize problems and help build up your credibility with any investor or bank.
The more solid information you can gather for your own use, the better the business plan will be. But a banker or other outsider will not have time to read through all the details.
If you still need some help structuring your business plan or if you need help growing your company talk to us here at Firebird Business Consulting. Your success is our success.
Please allow up to 24 hours for a response. We look forward to our conversation with you!
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