How to best formulate a business plan
A solid plan should sell your idea and guide your business as it develops
All great companies begin life as a written plan, a comprehensive blueprint covering the most important facets of a business. It's a fundamental step for getting your idea off the ground, and it needs to be rock solid to convince your potential investors that you have done your homework. The best plans will not only represent your business proposal, but will act as a roadmap and a reference point for your operations going forward.
When approaching a business plan it can be difficult to know where to start. The most important thing to remember is that a plan should be able to tell an investor everything they need to know to make an informed decision. Don't be afraid to tailor a plan to an audience, be it investors, potential management, or partners. The points below are by no means an exhaustive list, however we will go over some of the more important aspects you'll need to cover, taking into consideration some potentially disruptive factors such as Brexit and GDPR.
Every plan should include an executive summary, a short snapshot of your business that gives your audience a brief idea of exactly what you are trying to achieve and how you will do it. Depending on the current state of your business, the content may vary. Established companies will want to focus on brief descriptions of your current operations, your products, any particular highlights you are proud of, and a summary of your future plans. Newer startups will want to focus on the story - why you entered the industry, how you developed the idea, and your experience to date. Ultimately, you need to convince your audience that you are going to be able to deliver on your goals.
This is your opportunity to give a rationale for your idea. By describing the current industry landscape and its limitations, you should be able to guide an investor towards the same conclusions you arrived at. You need to detail specific objectives for your first few months and years, such as landing 50 orders in the first month, and explain how these can be reasonably achieved.
Depending on the industry you're going into, the impact of changes such as Brexit will either be minimal or far-reaching. You will need to demonstrate a complete understanding of how events such as leaving the European Union will affect your business both in the short and longer term. Disruptive factors should be an important part of setting out your objectives and shaping your timeline for achieving them.
Part of that overview should be a comprehensive look at the industry you're entering. It is your chance to demonstrate to investors that you understand how your target market environment works, and how best to launch a new product or service to best effect. This includes looking at the potential impact of emerging trends and technologies, and how these will either present opportunities or potential dangers for your operations.
This is also an opportunity to describe your core customer, who needs to align with your business goals. If you're looking to sell a luxury product but you're aiming it at students, for instance, you're going to run into problems.
The natural next step is to then explore your competitors. You will need to evaluate every potential competitor, understand their strengths and weaknesses, identify key rivals and their market share, and explain how your service or product provides an alternative experience for a customer. You're looking for holes in the market that you can exploit, both in the short and longer term.
With your idea and customer clearly defined to your audience, it's time to describe what the day to day running of your operation will look like. Here you will need to outline your plans for taking on employees, what contract types you are likely to use, and how quickly you will expand. You will also need to set out where you plan to be based, whether this will include foreign expansion, and how much you anticipate this will all cost.
A fundamental part will be getting to grips with the latest employment laws, and understanding changing regulations. For example, If you are dealing with EU citizen data, or employing EU citizens, you will be affected by the regulation changes brought about by GDPR next year. For more information on the GPDR changes, head here.
Strengths and weaknesses
While it's tempting to only shout about how great your idea is, remaining realistic about your strengths and weaknesses will serve you better in the long run. Use this opportunity to focus on some of the stronger aspects of your business, such as product quality, experience, or even a bold brand name. Yet you will also need to take a measured look at where you feel you could improve: this could include a reliance on a niche customer set, a lack of financial backing, or a lack of expertise. With weaknesses identified, you will need to demonstrate how you will overcome these. For advice on how best to run a SWOT analysis to do this, head here.
You may have the most innovative business idea in the industry, but if you're unable to make it cost effective, you will never attract the backing you need. Partners and investors need to see that you have a robust financial plan in place, that takes into account market projections and sets out clear and achievable targets. While established companies will need to demonstrate historical financial data, typically over the past three or five years, all businesses, no matter what stage they're in, will have to provide financial forecasts. It is critical that these match with whatever funding you are asking for, as investors will be scrutinising your financials closely for inconsistencies. Clearly state what you are asking for and how it will be used. This is arguably the most important aspect of your business plan, and it may be prudent to seek help from a bank or business advice organisations.