Business plans: Part 1
Hi and welcome to the first part of a series of posts we will be creating to help you to prepare a business plan to assist those seeking to become self employed
Basically a business plan tells what you plan to do and how you plan to do it
The average length of your plan should be 20 to 30 pages of text plus another 5 or 10 pages of appendices for monthly projections, management CVs and other details.
If you intend to feature Product pictures, blueprints, floor plans and such like then more pages are justifiably acceptable. The look of your text should be simple and inviting, Use no more than two fonts for your text such as Arial for headings or Times Roman for body text. Font size should be 12 point in size
Don’t slam words together at the end of pages, Use page breaks to separate sections and charts from text. Keep your plan simple so you can make your point quickly and easily don’t use long complicated sentences, avoid using acronyms. Use simple, straightforward language.
Use bullet points for lists, this will help the reader digest the information more easily.
Use business charts,Summery tables and bar charts at a minimum, sales, gross margin, net profits, cash flow and net worth by year. Make your important numbers easy to find and easy to understand.
Use simple business charts to highlight main numbers, make the related details easy to find in the appendices. Insure your numbers are obvious. Use the two-dimensional bars as they are they are easier to read as stacked bars makes totals easier to visualise.
If your sales divide into segments, stack the bars to show the total, use pie charts for market share and market segments. Show tasks and milestones as horizontal bars (Gantt Chart) with labels on the left and dates along the top or bottom. Only show major tasks and milestones, to many details make charts hard to read.
Remember to always put the source numbers close to the charts in a summary table so readers can reference them quickly and recognize the numbers in the charts. Don’t use a chart without referencing it in the text. If source numbers aren’t completely obvious in the summary tables, make sure you specify which appendices contain the detailed numbers.
Always save your plan
Proofread your text
Use spell-and grammar checker
Business Plans: PART 2
What is your plan for?
If you intend to use your business plan to raise money, you will have to pay close attention to your executive summary, I, e the marketing, management and financials, you will need to show specifically how your company is going to make money
Dose your business aspirations make economical sense. How much control are you willing to relinquish to investors, there are many question you will need to both ask and answer, the following is a guide you will add more as you go through this process.
What time will you devote to your business?
When will your business turn a profit?
How much personal funds have you put into the business?
What is your roll in the business?
Will you have employees?
Do you have a viable product/service that people will buy?
What will it take to accomplish that?
Do you have the time to commit to the business?
Do you have money to put into the business?
Your business plan should start with a mission statement. Every action in your plan should help accomplish your mission. Your mission clarifies what is important to you. Outline your intentions and motivations. Clearly state what it is you want to do. Your mission statement communicates the purpose and principles of what you’re doing Explain why your business venture exists and what you hope to achieve with it.
What are the needs that your business exists to address?
What are you planning on doing to address these needs?
What principles or beliefs guide your work?
There are a few simple but very affective key words to apply to pretty much each section of your plan and that is the who, what, where, why and how
who will be your customers?
How do you plan to reach your customers?
what do they want from you?
who are your competitors?
what do your competitors offer?
Where will you get the funds?
what equipment is needed by the business?
The executive summary should be one page long and highlight the important fundamentals of your business venture
Your Mission Statement/ Goals
Objective of the business
Personnel in evolved in the business
Business development, idea, description
Marketing and sales info
Design and development
Operation & management plan
Cash flow forecast
What you write in your business plan relies heavily on how your intending to use your plan.
By now you will have spent time gathering information for your plan, there are key sections that are essential in letting your reader know your outlined intentions
Starting with the all important executive summary, this page is to be treated as a mini vision of the over all plan it self, that’s how vital the executive summery is also your summery should be created after completion of the business plan. This will help you to identify specific sections to convey to the reader.
Your company over view should relay your business purpose this should come under the title- mission statement. With in your mission statement include a brake down of goals and objectives you set out to achieve. In straightforward language explain the principles that guild you’re the activities and actions of your business.
When you write your business environment/description you will need to include relevant researched information on your desired industry and the market place. Here you will need to convey the nature of the industry and direction of the market place, include the opportunities of your business environment and threats. In you industry analyst describe how your industry operates. Talk in depth about your customer. Break down the market into leader segments. Measure the size of your competitors base your analyst on revenue, profits market share. Your industry analyst has four key components. Relationship, stricter, market and finances.
Business plans Part 3
When you write your business environment/description you will need to include relevant researched information on your desired industry and the market place. Here you will need to convey the nature of the industry and direction of the market place, include the opportunities of your business environment and threats. In you industry analyst describe how your industry operates. Talk in depth about your customer. Break down the market into leader segments. Measure the size of your competitors base your analyst on revenue, profits market share. Your industry analyst has four key components. Relationship, structure, market and finances.
Work on linking your environmental analysis to all aspects of your planning and forecasting process, you need to conduct and compile your market research, be mindful of the latest developments affecting your market, industry and the economy, your business will be affected by multiple environments such a political, economical, social and technological, this is your PEST analysis. Every industry has a unique shape and structure. Use the PEST to analyze the environment in which your business operates.
The marketing environment and competitor analyst
Political Environment deals with trade’ government trade, traffic labor laws, environmental regulations, and policies etc. what ones will have long term affects on the economy and impact on your business either directly or indirectly. How stable is the political environment, remember the political influence regulating business and the power of consumer spending. Government regulations change and this can impact on the economy long term; assess its impact on your business.
Economic Environment deals with the forces at play within the economy that the business has little control over, things like interest, inflation, and exchange rates increase in Gross Domestic Product (GDP), the financial and stock markets, the job market, etc. will each impacts on your business from your ability to generate revenue to the cost of borrowing money or the salaries you will pay to employees.
Social Environment deals with the demographics of the environment that your business/company operates within. Demographics are the characteristics of a human population i.e. gender, race, age, income, disabilities, educational attainment, employment status, and religion. How will your business affect particular groups, what factors can in pact on operations and revenue.
Technological Environment refers to the technology that currently exists that the business has accessible to them such as servers, computers ect.
You will need to summarize the high points of your business this will be your SWOT analyst and covers your business strengths / opportunities and weaknesses / threats. Investor’s lenders and partners will want to know about the downside of your new venture.
Porter’s Five (or Six) Forces Analysis
Porter’s Five Forces is a framework for industry analysis and business strategy development. Analyze the microenvironment of your business. Each of the forces can be given a value of a low, medium, strong, or very strong rating and together provide a strategic ‘picture’ of your business.
Research and fill in the following, use the heading below as a guide
1. The bargaining power of customers
2. The bargaining power of suppliers
3. The threat of new entrants
4. The threat of substitute products
5. Intensity of competitive rivalry
6. Relevant when obtaining resources
For the SWOT you need to create a Grid 3 Colum’s across and 2 Colum’s down, title top cross header to read Positive and Negative. On the 2 Colum’s down title header to read Internal and External. Segment your SWAT into four quarters. Add strengths and weaknesses to the internal Colum’s, as they are internal factors and opportunities and threats to in your external Colum’s as these are external factors that affect your business. Now you should have four lists one for each component.
- Strengths of the organization that positively impact its ability to achieve business objectives, the here and now to build apron and maintain
- Weaknesses are the attributes of the organization that negatively impact its ability to achieve business objectives that will need to be reduced and stopped.
- Opportunities are the external conditions that potentially assist the business in achieving future objectives. Discuss and prioritize future strengths
- Threats are external conditions that potentially threaten the success, in the present or future, of your business.
The following sites has been used in creating some elements of the business plan series.
refer to links below for more information and advice