A business plan is not only essential for starting a business or for raising funds, but it is vital for running the business. It will help you keep on a specific course or alert you to situations when things are not going to plan and force you to take action. 1. Give a structure to your plan
The following can help you decide what should go in, and give a structure to your plan: What is the nature of your business?
What is the market?
Outline the potential of the business
Forecast profit figures
How much money will you need?
What are the prospects for investors/lenders?
Make your plan match its purpose
However, you may have different objectives for writing your plan so this will determine what needs to go in. If you’re developing the plan for your reference only, and not for outsiders, then you will not, for example, need to include background information on the company. “Be clear who your audience is. Description of the management team is very important for investors, while financial history is most important for banks,” advises Tim Berry, founder of Palo Alto, which produces business planning software. 2. Prove every part of your business plan
A business plan needs to be a persuasive tool, especially if you are using it to raise outside finance. You need to convince whoever is reading your plan to keep turning the pages. Emphasise what is exciting about the prospects of your business, such as potential revenue streams and customer base, and back this up with accurate figures and thorough research. Remember that investors and banks are flooded with business plans, and yours will stand a chance of being read if it stands out – but don’t fall into the trap of producing unrealistic figures or statements. Your plan and figures must achieve a balance between optimism and realism. Business plans can be easily ripped apart so every assumption will need to be justified, not once but again and again. It’s a good idea to ask a friend...
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