Business Plans are vital working documents that can define your business, drive investment and align management. All serious businesses will have a Business Plan in place as it formalises a plan and Business Direction. Each Business Plan is different depending on the Business but should generally cover a number of key sections:
- Executive Summary
- Business / Revenue Model
- Product / Services Detail
- Market / Competitor Analysis
- Financials (P/L, Cashflows, Returns)
- Management Team
- Risks and Mitigations
- Supporting Documentation (E.G. Patent Detail)
Include realistic financials – If you don’t include financials at all, you are shooting yourself in the foot. Financials are the backbone of the plan and what excites a professional investor. Having a prudent base case does two things – if the business still shows good returns in the base case, you know the project has potential but also you know you have a few other upsides up your sleeve.
Manage expectations – It is important that a funder knows how much investment you need, by when and what for. Also at this stage, you need to think about what the “exit” is, providing you deliver the plan what is the trigger for the investor to get their return – is this an IPO or trade sale or …?
Be accurate – Make sure all there are no small mistakes in the business plan document that can undermine your plan and your delivery.
There are some simple rules to follow:
- Take your time
- Carry out thorough research
- Include all management
- Keep it updated
- Be as succinct as possible
- Use diagrams
- Ensure clear sections
The “Do nots”
- Use Business Plan “templates”
- Not include any Financials
- Assume prior knowledge
- Be inconsistent
- Make vague statements
- Confuse profit and cash flow
- Ever finish updating the Plan
This may be obvious but yet so many of the above rules are broken! The bottom line is really that the business plan is a vital document to show an investor that you have all the pieces in place to be a viable business and more importantly make a return for the investor. It can be daunting to think of all the various elements of the plan but doing this will really focus the mind.