However, you will find that an enthusiastic rendition of your plans is often not enough for getting funds sanctioned or attracting investors. Most investors or banks will enquire about your business plan, so creating a good one is of utmost importance.
The Executive Summary
Hands down the most important thing you will write. It is used by investors to determine whether or not they will meet you. The executive summary is the first section of your plan, and one that is of most interest to anyone and everyone. Nobody is going to read your plan from cover to cover so a well-constructed logical executive summary will help a lot.
You need to address the following:
- What is the problem that you solve?
- What is the solution you are providing for this problem?
- What is your business model?
- What is your secret sauce? (Why are you different?)
- Who is the team?
- Marketing & Sales strategy?
- Who are your competitors?
- Current status
When you write a business plan, you put down your ideas into words. The mere act of putting your ideas to paper will help reveal all hidden loopholes in your business idea. As you pen down the business concepts of expansion and promotion, you get a golden opportunity for critical evaluation. This is perhaps the first and only opportunity for reconsideration and revaluation before investing a single rupee.
For setting up a business, you will need investors and your investors will need your business plan. Most serious investors will scrutinize your plan even before asking you questions. Your plan should be carefully constructed with detailed (and logical) expansion plans supported by credit reports and a good loan dispersal statement.
Once your investors are happy with your plan, you will have to add contract papers and financing statements to your plan.
The importance of your business plan does not end once you have managed to secure investors. Legal services, mentors and advisors will all want to have a look at it before they offer legal counsel or financial advice. Treat your business plan as a living agile memo, which evolves with time and changing circumstances.
Planning makes all the difference in the world especially in the context of small businesses. A good plan is versatile, detailed and supported by realistic financial projections.
Three other components of a business plan
If your audience gets past the executive summary, the next section they will look at is the financials. Explain your need for funds, a reasonably accurate estimation of the amount of money needed and your plans for repayment. A break even analysis should also be included.
The next section (in order of importance) is the market analysis. Accurately, write about the characteristics of your targeted consumer group and your strategy for pushing your products. Include estimates of demand patterns, pricing strategy and sales plans in this section.
The final area of interest is the section where you include the full analysis of your business idea i.e. your business section. Use general terminology and put down your contact details in this section.
Things to consider and think about
A business plan is a tool not the be all and end all. It should be brief as possible, and give a good idea or overview of the company but be prepared to change it over time. It won’t / can’t stay static as you can bet your operating environment will be changing all the time. Spend 70% of your business plan effort on writing the exec summary as this is what will be read most of all. Plus, keep your financial projections to a maximum of 2 years. Nobody knows what’s going to happen when you first start the company so it’s all guess work anyhow.