Anyone who has ever sought financing for their business from a financial institution knows that writing a business plan is a prerequisite to receiving any funding. To be considered for financing, most banks and other financial institutions such as venture capitalists will require a comprehensive and detailed business plan from which a thorough understanding of your existing or proposed business, your own goals and objectives and your financing requirements can be obtained.
Focus should be concentrated in some key areas, namely;
The business The entrepreneurs The market The financial management and planning The risks and rewards.
We can provide you with a general guide to writing a business plan but always bear in mind that every business is unique and each plan needs to be tailored accordingly.
All the same, no business plan would be considered complete without the following
A title page An executive summary Overview of the business Management The market Sales and marketing strategy Financial statements and projections Legal and regulatory environment Strengths, Weaknesses, Opportunities and threats assessment (SWOT analysis) Supporting documentation
The Title Page
The title page should be short, precise and to the point. A good example would be'
"Funding Proposal For Acme Distributors Inc"
Thus, at first glance your banker or potential investor has a fairly good idea what the document you are handing them is all about.
Executive Summary
The most critical part of your business plan is the executive summary. Well written, it can win over a potential financier or investor without having to get into the 'nuts and bolts' which would normally be reserved for the rest of your plan.
It is a summary of the whole plan and captures the essence of what you have included in the various headings within the plan. The executive summary should be the last to write and it should be self explanatory without requiring the reader to refer to other pages of your business plan.
Overview
In the overview, you describe your business profile, products and/or services. In the profile, ensure that you include;
The background and history of the business The type of business e.g. proprietorship, partnership, Corporation e.t.c. The kind of business e.g. new, take over, expansion, franchise e.t.c. The mission, vision and values of the business, the long and short term objectives for business growth.
When describing your products and/or services be sure to include the following;
A full description of the products and or services you are offering or intend to offer. Simply stating, 'fast food caf' is not enough. You need to delve into details and include any unique features that give you a competitive edge over your competition. If you are in manufacturing, then you must include the product life cycle. Describe any key technologies that you use together with any current and future research and development Give a description of the location of the premises and where applicable, production facilities describe processes and capacity, identifying any existing constraints and possible problem areas include information on quality assurance systems and procedures, and certification
Management
Of particular concern for any financier or investor is how the business is being managed or is going to be managed. This is because human capital, more often than not, is responsible for making or breaking an enterprise. In this section you need to provide a detailed description of the ownership structure of the business. It is best to use a chart to do this. In summary be sure to include;
skills and experience of the entrepreneurs specific functions and responsibilities of each entrepreneur and/or manager a detailed resume of each entrepreneur the financial contribution of each entrepreneur to the business, and the current shareholding structure. The remuneration, incentives, share options, and terms of employment of key management and directors Any deficiencies in management and how these positions are to be filled current and future employment levels, labor relations and union membership details of systems to be implemented: information technology, accounting, administration, management information and stock control systems details of auditors, attorneys, bankers and professional advisers
The Market
In this section you need to analyze your market from two perspectives. An industry perspective and a customer perspective.
From an industry perspective, summarize the industry in which you will compete. You will obtain most facts from government websites and trade organizations. You will need to note;
current trends and developments in the industry important players in the industry industry segmentation industry issues e.g. high cost of raw materials national or global events influencing the industry or what we call the PEST factors (Political, Economic. Social and Technological factors) national and global growth forecasts effect of legislation
When analyzing your potential customers be sure to include;
a description of the existing market and growth potential a detailed analysis of the size, maturity, trends and seasonality a list of existing and potential customers, supported by letters of intent, orders on hand and contracts awarded, where applicable a detailed analysis of your competition, the price and quality of their products, service and delivery, and their expected reaction to your activities a demonstration of your competitive advantage
Sales And Marketing Strategy
This is basically a description of how you will deliver your product and/or your service to your targeted customers. You will need to elaborate on current and planned strategies specifically as regards; promotional activities, distribution, staffing, sales motivation and pricing.
Financial Statements And Projections
This is one area where most people get it wrong. It is advisable to seek the help of a CPA or use the numerous free resources on the internet to help you get the basics of financial statements right. Ensure that you include; Operating budgets, cash flow projections, income (profit and loss) statements for five years. For the first two years you can provide monthly projections, quarterly projections for the third year and annual projections for year four and five.
If your company is already operating, then you need to provide historical performance data from your last three audited financial statements.
Never fail to disclose the amount of loans, long or short term, that you hold. This information should include the outstanding amount, interest rate and bank(s) involved.
Finally, enumerate your capital requirements and explain how the sought funding shall be utilized.
Legal And Regulatory Environment
In this section you describe the laws and government regulations that affect and concern your business. You will also need to show that you have complied with all laws in your area of operation by attaching copies of any licenses, copyrights, trademarks, tax compliance certificates and so forth.
Swot Analysis
No business plan is complete without a discussion of definite and possible strengths, weaknesses, opportunities and threats. You should provide an honest assessment of the risks faced and relate this to the potential for growth, profitability and capital appreciation. This is very important to an investor. Finally, suggest strategies that can mitigate the risk factors you have highlighted.
Supporting Documentation
While writing the business plan you will most likely find that you have used a number of information sources to provide data to back up the feasibility of your business e.g. you may have used data from a government website to show that demand for your product has steadily increased over the years. Where applicable ensure that you include the following documentation; newspaper clippings, promotional literature, product brochures, market research, trade and industry publications.
You may also need to provide supporting documentation for contracts awarded, letters of intent, orders, leases, memorandums, pro forma invoices, marriage certificates, life insurance policies and so forth. The bottom line is to back up any statements that require verification in your business plan.
(C) Copyright - Kimkay Kihara. All Rights Reserved Worldwide Kimkay is a freelance writer and researcher specializing in web content, articles, E-books and ghostwriting. You can find out more at Kreative Freelance Writing
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