Your Business Plan is made up of eight different sections.
1 – Business Concept
- Define your product or service – outline what you’re offering in its simplest terms.
- What problem does it address – describe the single most important problem is solves.
- This tells the reader what you’re offering and what problem you’re solving.
2 – Target Market & Potential Customers
Break out the target market and the number of customers you hope to attract.
- Who are your target customers?
- What is the market size?
- How large will this market be in the next 2,5,10 years?
- How do you plan to attract customers?
- What is your sales strategy?
- What is your marketing plan to promote your company?
All of this is speculation. You don’t know how many customers will actually buy. Maybe none! But, you have to future plan so you can attract the investment you need.
3 – Competitive Advantage
In this section of your Business Plan, describe what gives you a Competitive Advantage.
- What makes your business unique?
- What patent do you have (or will develop) that will generate royalties?
- What makes your product than others in ways you can quantify? For example, you can provide credit cards to teenagers. Most companies are not authorized to give credit cards to teenager. You can! That’s your competitive advantage.
- Identify the greatest obstacles to the success of your company and not just competitors. Maybe it’s legislation, drug trials, testing, compliance, IT platforms, or other issues such as lack of experience.
4 – Competitor Analysis
Next, counter-balance the claims made in your Competitive Advantage and identify the three ways your competitors may undermine your business. If you don’t know your competitors, you have looked hard enough!
- Who are your three main competitors?
- What are their strengths and weaknesses?
- Could you partner with them?
5 – Legal & Managerial Issues
In the next part of the Business Plan, look at the nitty-gritty of setting up a business from a legal perspective. While this may seem boring at first, hire the right lawyer and accountant to setup your company.
For example, setting up as a Limited company (LLC, LTD) gave me tax breaks that I didn’t have as a sole trader, single businessperson or partner. You can also set as a charity or religious organization and avail of tax breaks that way.
- How will you setup the company? Most likely as a limited company but you may also consider making it a partnership, corporation, or other business type.
- What other legal considerations need to be organized, for example, patent protection, and copyright?
- Identify the organizations, companies, groups you plan to build relationships with? For example, Chambers of Commerce, international trade organization, peer groups, industry bodies.
6 – Finances
Financials are the heart of the Business Plan. It’s where the investors will examine the numbers, run business model calculations, and see what profit margins can be made.
See this Cost Benefit Analysis Template for more details.
- Using tables or matrices may help present the financial data, especially for projections.
- How much will it cost to make your product?
- How much will it cost for recruitment?
- How much will it cost for marketing?
- How much will it cost for equipment, software, hardware etc?
- How much will it cost for operations, office, infrastructure etc?
- How much will it cost for salaries?
- How much total up-front investment is needed?
- How will your company generate revenue?
- When will your company break even?
- How will you use the profits you generate?
7 – Management Team
If the investors get past the Financials, they’ll want to see who’s involved.
- Describe each team member’s background.
- Describe the unique skills they bring to the project.
- Explain why this is a winning team? Why the investors should believe in the team.
- What other people/skills do you need to find?
- Add resumes to the appendix.
8 – Appendices
Include any supplementary information (graphs, charts, statistics, research etc) that would help you put your idea in context.
write for your readers
Provide the answers to the questions that the investors will most likely have. Let me put that in better English.
Write the Business Plan from the perspective of the investor. No investor wants to invest in a project unless it passes all the tests. From an investment perspective, put yourself in their shoes. What fears are they most likely to have? Then address these fears. What concerns will they have about your team? Describe the unique attributes that make your team special. Where will the profits come from? What contingencies do you have in place?
It’s classic FUD. Address their Fears, examine where they have Uncertainly, and why they might Doubt you. Then respond to each of these point by point.
Next Steps
If I were to help you write your next Business Plan, what would be the one area you’d want to do first. Let me know and we’ll discuss it here next week?
Please share your thoughts below.
About the Author: Ivan Walsh provides Business Tips for Smart People on Klariti.com. His also runs the Business Plan Blog at http://www.ivanwalsh.com. Follow him at http://twitter.com/ivanwalsh
PS – you can download the Business Plan Template here
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