Introduction to writing a good business plan
- Planning is a process leading to the formulation of a plan
- A plan is the outcome of the planning process
- The planning process (thinking, researching, consulting, discussing) is at least as important as the final written plan
Business plans
A business plan is:
- A report showing the plans of the business, often used to attract finance from investors and creditors
- A document that is designed to provide information about a new business or venture to persuade financial backer to invest in a business
The business plan describes out the
market opportunities the business intends to exploit, how it will do so and
what resources are required
Business plans & raising finance
A business plan is essential to:
- Persuade people to invest in an enterprise
- Convince creditors about the credit worthiness of the enterprise
To persuade banks and others to lend
or invest money it is necessary to:
- Demonstrate the lender/investor has a good chance of being repaid or getting a good return on their investment
- Build confidence about the firm and owners’ capabilities
- Demonstrate that there is a good market for the product or service
Internal uses of a business plan
- Clarify objectives
- Provide a sense of direction, purpose and urgency
- Plan all aspects and ensure that nothing is overlooked
- Provide a checklist to help run and control the business
- Monitor progress and success
- Improve performance
- Improve motivation and communication
- Allocate responsibility
- Better control and co-ordination and greater consistency
- Failing to plan makes an organisation reactive, vulnerable to threats and closed to opportunities
Key planning questions
- Where are we now?
- How did we get here?
- Where would we like to be?
- How do we get there?
- Are we on course?
Stages in business planning
(1) Situational analysis
- Analyse the external environment
- Analyse the internal environment
(2) Objectives
- Define the business and mission
- Set corporate objectives
(3) Strategy
- Formulate strategies
(4) Tactics
- Make tactical plans
(5) Actions
- Implement the plan
(6) Control
- Build in procedures for monitoring and controlling
Charactertistics of effective
business plans
Business plans are more effective
if…
- They are carefully researched
- They contain detailed market analysis
- They are used as a reference point for decisions
- Actual performance is compared with objectives and objectives are regularly updated
- They evolve over time to ensure that growth targets are realistic and challenging
Ten common mistakes in producing a
business plan
- Failing to plan in the first place
- Shrugging off values and vision - these are there to remind the entrepreneur where he/she wants to go
- Second guessing the customer - ignore your customer at your peril
- Underestimating the competition
- Ignoring the firms own strengths and weaknesses
- Mistaking a budget for a plan
- Shying away from reasonable risk
- Allowing one person to dominate the plan
- Being afraid to change
- Forgetting to motivate and reward
Typical structure for a business
plan for a start up venture[8]
- cover page and table of contents
- executive summary
- business description
- business environment analysis
- industry background
- competitor analysis
- market analysis
- marketing plan
- operations plan
- management summary
- financial plan
- attachments and milestones
