Monday, June 20, 2011 - Page 2 of 5
How to write a good business plan
Set Realistic Goals
A business plan must help you achieve a realistic business goal. For an established business, it explains how you must bring together all the company’s assets — plant, management, technology, finance, staff — to reach your goals.
You must set quantifiable goals such as boosting sales by 30 percent and to earn an extra 10 percent in profits. However, other goals to help achieve this could include:
- Cutting administration costs by 5 percent
- Training staff in direct telephone-selling techniques
- Recruiting a national sales manager
- Setting up quarterly national sales seminars for agents
Reject any ill-defined or wordy mission statements or overall strategic plans. You are writing a How-to-Do List that coordinates everything in your business to meet your main goal. Make your business plan a nuts-and-bolts action plan to achieve your goals.
Write Down your Main Aim
Although business plans share many similar elements, they differ depending on their aim. A business plan designed for a start-up company differs from a five-year business plan for an established business. Think through your specific aim in drafting your business plan. Try writing it down in one sentence. For example:
- To raise $400,000 by selling 5 percent equity in the company to fund local advertising and expand the business turnover by 15 percent over two years.
- To sell the company to a competitor at 12 percent over the stock-market valuation of $300 million.
- To turn around the annual 8 percent decline in sales by introducing four new products in the accountant billing software market.
The more specific your business aim, the easier you can keep to the relevant information when you write your business plan. For example, if your business plan is to interest venture capital, it has to convince a potential backer your business proposal is a profitable investment. You must therefore:
- Attract the backer’s interest with the main idea.
- Stress the strengths of the business idea in the market compared to the competition.
- Assess the risks of the business and potential problems.
- Explain the development and growth potential of the business.
Think about your Readers’ Needs
Are you writing your business plan to:
- Attract venture capitalists to fund a start-up business?
- Gain a bank loan or other financial backing?
- Help guide you in running your business for the next five years?
- List the business on the stock market?
- Recruit top-quality personnel to join your company?
Depending on your reason for writing, your readership will differ. Writing to attract venture capitalists needs a concise, accurate and realistic description of the business idea, the potential market, the advertising and sales budgets and the key personnel. Writing a business plan to recruit personnel will have detailed descriptions of salaries, stock options, conditions of service. Writing a plan to explain to employees the planned changes to the company needs a breakdown of how changes affect each department.
The aim and readership of your business plan are crucial. You must work hard to put together information reflecting your aim and meeting your readers’ needs. If you are writing a start-up business plan to gain financial backing for your business idea, your readers’ want a quick understanding of your ideas, strategy, strengths and weaknesses. Your audience wants a short, accurate, realistic document, including specific and relevant information and drafted in plain English.
If you are writing an operational business plan, your aim might be to guarantee the business grows by 10 percent a year for the next five years and your main readers will be your directors, staff and shareholders. Your readers will still want a clear and concise document, written in plain English. However, the whole emphasis of the plan may differ. This operational plan will concentrate more on the strategy for achieving growth. You will have to concentrate on giving specific information on how public relations, marketing, advertising and product development will lead to greater sales.
Work out your business plan outline
Think of most business plans in two parts:
- The key aims you want to achieve.
- The strategy to succeed.
Anyone picking up your business plan should quickly understand your basic idea or proposition. The reader needs to know about the industry, customers, competitors and the benefits your products or services offer. Then you need to work through your business strategy in detail, showing why it will work and how it affects your products and services, personnel, funding and so on.
Keep each section short
Keep the business plan short. Whatever the length, your main aim is to write ‘tightly’ keeping to the relevant facts. Keep more detailed and non-essential information out of your plan or relegate it to an attachment.
Use Quantifiable Information
In each section, back up your assertions with solid facts. Even if you are a new venture and cannot give specific figures on the performance of your business, quote figures for the industry or your competitors. These real figures carry more weight than your assumed projections and give more reality to your plan.
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