Standard Business Plan

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It is important to write a comprehensive business plan when seeking funding. Both banks, and from private investors, will want to read a business plan that shows in detail how you are going to develop a successful business.

Introduction page

The introduction page should include contact information, basic information about the business, reason for the business plan, and a confidentiality clause.

Executive Summary (3-4 pages)

The Executive Summary should be written last, but presented first. It should capture the essence of the business concept and opportunity in a few short pages. This is what will be read first - if you can capture the investor’s interest, they will read further to fully examine the opportunity.

It should include information about the business concept, the opportunity and how you intend to profit from it, who the  market is, a summary of financial information, why your business will meet market needs better than existing providers, and who the key management will be.

Description of the Company & Business Concept

It is essential that you can clearly and concisely explain the business concept in a manner that is simple for others to understand and visualise. Your investors will want to fully understand the business before they will be prepared to contribute financially to the concept. They will want to know features and benefits of the product or service, how far along you are with testing, what testing has been completed and what is left to do. If you have filed for patents or trademarks, that information should be included, as well as a discussion of future evolution of the product or service.

Market Analysis

This is your opportunity to show that you understand who your customer is likely to be. It is not enough to say “everyone who eats” if you are entering the restaurant trade or “everyone who wears clothes” if you are opening a retail clothing store.

You might be selling brand name surfing clothing in sizes 6-10 - in which case your target market is going to be teenage girls and women under 25 years of age who are a size 10 or smaller, who value brand name casual wear, and for whom price is less important than appearance; they are also likely to live in a certain geographical proximity to the store (perhaps a 10km radius). These assumptions give you a very specific market population upon which to base your sales forecasts.

Industry Analysis

It is important to have a solid grasp on the status of the industry - if you are estimating a 20% per annum growth in a maturing or declining industry, you must be able to justify your estimates. In order to convince investors to part with their hard earned cash, you need to show an excellent understanding of your industry’s size, life cycle, trends and forecasts, and profit potential. You should also be able to identify what are the barriers to entry, and if there are any possibilities these will change in the future.

The role of technology in the industry, and how quickly it changes, information about research and development benchmarks, and about operational requirements are also vital in a well rounded business plan.

Competitor Analysis

One of the traps many new business people fall into is thinking that their new widget concept has absolutely no competitors. This is rarely the case. Even if the widget or service IS truly innovative, it is likely that competition exists in terms of the “make-do” solutions people have found.

In the case of a new restaurant - there are the direct competitors of other restaurants in the vicinity - but there is also competition from the take-away shop on the corner, the pre-prepared meals in the supermarket freezer, or even the fresh products at the green grocer. Any other provider of foodstuffs is a competitor, and you need to understand this in order to work out how best to communicate YOUR product in a way that attracts attention.

Operating Plan

Whilst not always a vital part of a plan, the operating plan will demonstrate an understanding of the resources you will need in order for your business to succeed - and it will also show your attitude to what is important as you work to become established. An investor will not be impressed if you intend to spend their cash on vehicles and drivers for management, if there is no benefit to the business for this. Likewise, if you suggest that 10 staff can work efficiently with 5 computers and a small office, it may indicate a lack of realism in your expectations.

Financial Plan

As a business owner, you do not necessarily need to understand the debits and credits of double entry accounting, but you do need to understand the implications of the information provided in cashflow statements, profit and loss, and balance sheets. This is your opportunity to discuss the forecasts you are making, and to demonstrate your understanding of the impacts of various financial assumptions and decisions.

Appendices

Information that provides evidence for the statements you have made in your report should be attached in appendices to validate your claims. They may not be closely examined, but by including them you show that you have thoroughly researched the situation, and show yourself to be quite aware of your business.
Good luck in obtaining finance for your new business venture!

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