Archive for January, 2011

The Basics of Writing a Business Plan

January 6th, 2011

While there are no strict rules for writing a business plan there are some business plan writing guidelines that you can follow that will ensure your business possesses a professional and effective plan. The amount of information and level of detail included will depend on the intended audience. For external audiences such as investors, lenders and government agencies your plan will be much more detailed and in-depth. For internal audiences such as upper management or board of directors the information can be less detail oriented and more goal focused. In either case all information should be factual with evidentiary back-up. To be effective, you should include the following sections and headings:

Executive Summary:
Sometimes this is the only information that potential investors read so it is essential to give a summary that highlights key aspects of the plan, including the goals and objectives. Usually this section will cover no more than 2 pages.

Description of the Business:
Start-up plans, history and legal establishment of your business.

Operations:
Outline the specifics of your business. Include facility requirements and equipment as well as any outsourced operations.

Management Team and Employees:
Include information on key employees and managers including skills and salary. This section should also include recruitment strategies and salary forecasts.

Product or Service:
Include detailed descriptions of products and services, patents and customer base.

Market Research and Economic Assessment:
Include information on who your customers are and how to reach them. Also include information on the economic environment, market conditions, competitors and supply and demand issues. Analyze the different competitors as well as their products, and especially what you will offer that they do not.

Selling the Product or Service:
Specify the sales process. This will be dependent on the type of business to be established. Will customers be attracted by advertising and promotion alone, or will it require salespeople to obtain business? Is the nature of the business that it will need inside or outside salespeople, or both? Will the owner or partners be the salespeople? Will salespeople need to be hired, or will the sales function be contracted out to a marketing representative company?

Financial Plan:
Do a complete assessment of all the financial elements in your business. Include a balance sheet, profit and loss statement, cash flow, break-even analysis, assumptions, business ratios, and any other pertinent financial reports.

Strategy and Implementation:
Include specific goals and dates as well as management responsibilities. It is also very important to include the potential business risks and the actions that can be taken in each scenario. This will show that you have done your due diligence by thoroughly researching and analyzing the upside as well as the downside of the business. It may also enable external and internal stakeholders as well as investors to feel secure in knowing exactly what the back up plans may be if something were to go wrong.