Mobile Edition
Print
Get the Mag
Weekly Updates[ILLUSTRATION OMITTED]
YOU have a great idea that may earn you millions of dollars. Your company is doing well but needs finance to expand. Either way, you need to excite wealthy friends or venture capitalists to invest in your company. Your verbal presentation, no matter how good a speaker you are, is not enough. Before people put money in your company they want hundreds of questions to be answered. They need details to weigh their risks. Thus, a business plan is a necessity to convince potential investors that their investment will multiply over time.
A business plan reviews the present status of a company and sets out a business strategy for about five years. A detailed operational and financial plan for the year ahead is usually included. The important focus should be on management, product and service, and marketing and sales.
Managers often float new ideas for discussion during meetings or informally among themselves. Even if your company is not seeking additional capital, it is an excellent idea to have a written business plan to highlight opportunities and risks and help to change direction if strategies do not work out. Once formalised, the business plan provides guidelines for operations, and how to react when the political and economic climate changes.
The plan provides a benchmark of the limits and goals for measuring actual performance. If these are missed or exceeded, management has time to amend the plan and strategy.
Audience
As with all documents we write, we must know our audience then we can decide on the writing style, vocabulary, and content. If you are targeting the venture capitalist, since they are experts in deciding which business to invest in, your plan must be sound, well-written, show signs of good management, have an excellent marketing plan, and convince the reader that he can enjoy his profits by a certain time.
You will agree with me that bankers are the most difficult people to convince when you desperately need finance. If your company is very successful, they will be the first to queue up to see if you need financing. For startups, they will scrutinise your plan with a magnifier and expect detailed financials. Finally, when they are convinced that your company has potential, they will give you the loan provided you can support it with collateral.
If you are writing for people who know you and your company well, they don't expect a detailed business plan; they are willing to have a stake based on trust. In such a case, your tone of voice can be informal.
Steps in a Plan
When formulating your business plan, answering these questions will help clarify the steps to take.
* What are the business activities?
* What is the status of the business?
* What are your local and export market, your competition, and your market positioning?
* What are your objectives?
* What is your strategy to reach the objectives?
* What are your strengths, weaknesses, and opportunities?
* How can you develop a strategy based on the above?
* What are your costs, revenues, and cash flows? Develop a financial plan.
Length
Many writers are unsure about the extent of the plan. How many A4-size pages are required to make an impact? Say what is necessary in as few pages as possible. Note that your readers who are presumably very senior in rank have little time to plough through long reports. A good guide is to have plans from 24 to 44 pages with relevant charts and diagrams. These will help to cut down on the text and readers often enjoy viewing a well-designed chart. If you additional information which take up too much space but may interest certain readers, place them in the appendix so readers have a choice to read or to skip the pages. When composing the text, remember the three fundamentals of good writing: clear, concise, and complete.
Organise your ideas so that you avoid repetition. Subheadings will make your document easy to read and refer. Bullet points help to summarise ideas but they must be followed by elaboration of each point. Write from the most important fact to the least important. At the start of the plan, have an executive summary.
Executive Summary
This is a more complete overview of the report compared to the abstract found in academic articles. It enables people who may not have time to read a long document to understand its primary points and decide if it is necessary to plough through the whole plan. The summary states the most important points in the business plan which you think will interest the reader to read the plan thoroughly. It could include the objectives, strategies, strength of products, and forecast of profits.
After the executive summary, you could list the basic information about the business as in name, capital, official address, number of employees, vision and mission, products and services, and core competencies.
[ILLUSTRATION OMITTED]
Have clear objectives so that the readers will understand where the business is heading. Examples of objectives include: maximising shareholder value; maximising market share; maximising total assets.
Figure 1 shows a typical table of contents which you can use as your outline.
Numbers are Necessary
The reader expects to see the company's financials. If you are not strong in this area get the assistance of an accountant. It is worth the while to pay for such services as the financials will help to convince investors to support the company.
The financial information should include sales revenue, gross profit, operating costs, interest paid, and nett income before tax. Some plans have details of financial forecasts for one year.
When stock analysts study a company, besides looking at the profitability and long-term growth, they take a long look at the management team. If they are satisfied that the team is progressive, and has the capability to manage the company, they will recommend the stock to investors.
Taking a leaf from the analyst's book, you need to have some details of the management team in your business plan. An organisation chart will help. The board of directors should comprise people with experience and are respected in the industry. Provide the experience and qualifications of the chief executive office, the finance manager, the production manager, the marketing manager, and other key personnel.
You should also include a large section to describe your products and services. What are the special features of the products? How are they better than those of the competition? How much research has gone into the development of the product? Are the products patented? How large is the market?
To impress the reader, have a section on the core competencies of the company, for example, state the high quality control standards in production; good inventory control; excellent support from the main suppliers, and the strength of the brands.
Compile information about your customers, the industry, and the competition which you can share with the reader.
Word Perfect
Ensure that there are no typographical errors, statistical faults, and poor grammar and spelling in the plan. It gives the reader a poor impression of the company and may change the mind of a potential investor. If there are no good writers in the company, get the services of specialist writers who can help to polish up the draft.
A good business plan is informative, persuasive, accurate, and a joy to read.
FEED