If you looking to secure new funding for your business one of the first things that you are going to need to have in place is a robust business plan. Prospective funders, lenders or investors will want to see where your business has come from, where it is now and where it’s going in the future.
Download our white paper on how to write a winning business plan
A sound business plan will allow lenders to make an informed decision about the risks of lending to you and what the likelihood is that they are going to get their money back.
There are 8 elements to a good business plan as follows:
- Executive summary
- Descriptions of products/services
- Your market
- Marketing and sales strategy/tactics
- Management and staff
- Operations
- Financials
- SWOT analysis
Executive summary
Start the document with an executive summary of your business plan. This is possibly the most important part of your plan. Although it sits at the start of the document you should complete it when the rest of the plan is written.
Your executive summary should be concise but inclusive. Keep your tone professional but engaging. You want your lenders and investors to get the full flavour of your business, get them interested and whet their appetite. Make them want to invest in you.
Your products and/or services
What is your business. What are you providing to your customers. What is your value proposition and what sets you apart from your competition?
This is your chance to wax lyrical about the product or service you are offering. Investors are more likely to offer funding on a proposition that has a low risk of failing, so you’ll need to prove that there is a demand in the market. At this stage, an in-depth competitor analysis is not required, it’s rather an opportunity to promote your USPs. A review of your competitors’ is important.
Define your business to give the investor a realistic sense of scale. You need to show them you are confident about what you are trying to achieve. Detail the progress made so far as well as any future milestones you intend to meet – both long and short-term – especially in relation to the funding you are requesting.
Detail the market you are selling into
Have a detailed look at your market and include your research and description of the market you’re operating in. There are three important factors to getting this right, your customers, your suppliers and your competition.
You need to be sure you know what your customers want and have a look at what your competition is doing and how their customers are responding to their offer.
Analyse your customer database and try and find out what factors keep your customers coming back from more of your product or service.
Undertake a survey to determine what you can do to improve services and what kinds of products your customers want aside from your offering. This could help you in developing your business further.
Use online tools such as social media and competitor websites to research. It’s quite quick and easy to do and usually free.
Marketing & sales strategy
Marketing strategy takes the more long-term view of your objectives and where you want your business to be. It looks at how you promote and distribute your products or services. Sales strategy is more short-term and looks at how you get customers to buy your offering.
Make sure you examine the 4 Ps – product (what you sell), price (how much your customer pays), place (where you’re marketing your offering) and promotion (how you advertise).
Outline your sales channels and sales tactics in your plan so that your potential investors and funders can see what you do and how you’re doing it.
Management and staff structure – skills, workforce numbers, motivation
Investors will be interested in the management team too – who they are, what is their experience and history within the business, what is the share ownership structure and future management requirements. An outline plan for succession planning is key to include here as it will give the investor an idea of the direction in which the business is heading.
Focus on your company information and any trading history to date. This should include an outline of your corporate set-up, current ownership structure including any change of ownership through previous succession, an overview of the management team and a summary of major successes so far. You should include full CVs of the management team in your appendices.
Operations
Provide details of your operations – how you go about your business from day-to-day, where you do it and the tools you use.
Include in your plan details of premises, facilities, equipment, machinery, IT systems, infrastructure, regulatory framework (what do you have to conform to) and anything else that you need to ensure the smooth running of your business.
Financial forecasts – cashflow, P&L, historical information
You will need to create a financial model – including a summary and description of the financial forecasts, what the funding is specifically required for and how it will help you reach your next financial milestone. Investors will also be interested in the proposed return on their investment and the plan to ensure they will receive this; this will be influential in their ultimate decision to invest.
It is essential to include a complete set of summary financial information to support your business plan, with a full monthly three-year profit and loss and cashflow forecasts and a robust balance sheet in the appendix. You should also include a statement of any financial assumptions that you have made. This level of detail will give potential investors an indication of your business’ success so far as well as an idea of its projected sustainability.
SWOT analysis
Identifying strengths, weaknesses, opportunities and threats (SWOT) will help you identify what you do well and what you don’t to build your business, minimize risk and take advantage of your chances of success.
We have only summarised the business planning process here. For detailed information and help on writing a winning business plan or one-to-one mentoring contact one of our expert advisors on 0203 327 0567.