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5 Tips to Help You Get Your Business Plan Right
Business plans are dead — or are they? For many entrepreneurs, the business plan is an outmoded document and start-ups rarely think they need one to get by. But the fact is that a business plan isn’t simply a paper document; it can be a very valuable tool and a roadmap for even the smallest or earliest-stage idea, writes Connor Sweeney from InterTradeIreland.
A good business plan can foster alignment of ideas, set the tone for the business and even help with the brand messaging. And by preparing one, a company can identify a clear and definite plan of action to implement the business strategy where every member of the team knows their clearly defined role.
Without a plan, a business is essentially rudderless, and day-to-day activities are likely to be haphazard and reactive, in stark contrast to those businesses that implement a well thought-out and structured business plan.
So, how can you prepare a strong business plan?
Make sure your plan is easy to read – include headings, paragraphs, tables and graphs if appropriate. Include some white space. You must attempt to keep the reader interested throughout the entire document. Try to avoid the use of industry jargon – not all readers of the plan are as conversant with industry language as you are. Avoid the use of acronyms without first explaining what they stand for. This is especially important if the industry in which you operate uses acronyms as standard. Do you know what a PIP is? It's a Programme Implementation Plan, but you could possibly have been guessing for ages if you hadn't been told. Small things like that frustrate the readers of a business plan. Try not to do that!
2. Remember the objective
What is the purpose of your business plan? Is it primarily to raise finance? What type of finance? If it's equity then you should tailor the output to an investor's point of view, i.e. a return on their investment after a period of programmed development and a sale to maximise their investment – usually via a trade sale for cash. If you are using the business plan to approach a lending institution (bank) for funds then you need to tailor the plan slightly differently – they are interested in the business's ability to repay. You should prepare the plan with this in mind. Think about the business idea from the reader’s point of view. Why would they have an interest in this project?
3. Keep it to an appropriate length
An investor may have to read a lot of business plans. The more concise and to the point that a plan is the better. The plan should only serve to get you, the promoter, in front of an investor to make your pitch for funds! Make sure that your executive summary (the most important part of the plan) is no longer than 2-3 pages and that the whole plan is less than 25 pages using a font size 12. Oh, and don't use the executive summary to introduce new ideas – they should have been addressed in the main body of the text. Write the executive summary last. The best plans are the ones that have been distilled down from their original full size version to a clean, concise document. If you have additional information, it can go in an appendix.
Make sure that what you say in the plan is correct. Use your prior trading experience, and provide external data and research results to back up what you say. Don't fall into the old trap of overstating the size of the market. When estimating the size of the market, if you achieved 100% of the market sales would your turnover be what you claim the market size to be? Also, don't fall into the "We'll achieve 5% of the global market" trap. How are you going to do this? That's what the reader wants to know!
5. Leave enough time to prepare it properly
Don't rush the job. If it is prepared in a hurry, it will look like it has been! Get it ready and then leave it alone for a few days before revisiting it. Get someone else to read it – it's amazing what a second pair of non-industry eyes will do. Often, business owners will look at the first draft of their business plan after a year or so and be amazed how amateurish it looks. Your first attempt will probably be the same! Don't be put off; everything can be improved with a bit of work.
The key to a successful plan is one that catches the eye of the investor, gets the financials right and has enough detail on the route to market.
Written by: Connor Sweeney, Seedcorn Project Manager & Finance/Equity Advisor, InterTradeIreland
A version of this article was originally published on the InterTradeIreland website – visit http://www.intertradeireland.com/seedcorn/hints-and-tips/ for more hints and tips
Please be aware that all of the views expressed in this Blog are purely the personal views of the authors and commentators (including those working for AIB as members of the AIB website team or in any other capacity) and are based on their personal experiences and knowledge at the time of writing.
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