5 Things Every Good Business Plan MUST Have
Posted on 19th September 2017 in Business
Written by Freya Hughes
If you don’t plan your route to success, your startup will begin its life in a dangerous position. From the ideas stage right through to turning your first profit, you must know what your next step will be. While your plan is subject to change at a moment’s notice, it’s best practice to keep to what you said you’d do. Your plan will give you direction when you feel lost, so ignore it at your peril. Here are the top five features you need to include…
Different entrepreneurs have different personalities, which shine through in the smallest of ways. What you all have in common, however, is the drive to succeed and to make your business the best it can be. When you’re getting started, it’s imperative to set out your intentions for your company, but also to inject some of your business’ personality into your plan. Why make a business plan that doesn’t represent you, after all? Your business plan will take you time and thought and that’s a good thing. When you’re in the planning stages you need to get it right, so you have a set path to follow. Nail what you’ve set out to do in the introduction so you hold the attention of the reader or audience you’re targeting, and think about how you can make it more interactive. For example, include a small section to ‘meet the team’, so people can connect with the personal side of your company. Little touches like this make a difference, and could mean your plan stands out above the rest.
1. Your intentions laid out clearly
Think of this like your elevator pitch. It’s your first impression, right through to your close so it’s essential to get your message in there from the off. Communicate exactly what you’re doing, and edit out any ‘fluff’, Concise and direct language is a must. Tell your audience what your business does, how it’s going to make a profit and why people need or want to pay for your offerings.
A great business plan can turn an idea into a successful business. While its creation may be daunting, in the process of putting down your intentions you’re going to learn what will and won’t work through your research. At times you might realise you need to edit or reevaluate your chosen path, but this is a good thing. Adapting to what the market demands will mean you can be agile from the off – and that’s an incredibly valuable trait to have in business. You’ll learn about what you want your business to be, and how consumers need it to be.
2. Market opportunity / industry analysis
If you do anything while creating your business plan, you must research the industry and market. There is no point in creating a product when there’s no demand for it, and you’ll end up far worse off than you were before. You cannot focus solely on your own ideas when you’re creating your business plan. If you do, you’re ignoring what’s already going on and might end up recreating a brilliant product – but potentially not as well as the competition.
Knowing your place amongst the rest of the companies in your industry means you can secure your place before other newbies enter the equation. Work out what makes your business unique compared to others so you can make this your unique selling point. We shouldn’t have to tell you that if you decide to make a new social media platform you’ll (probably) never be as successful as Facebook or Twitter, so don’t make the same mistake in your own industry.
“A typical business plan will discuss a company’s target market, usually in terms of demographic information such as age, gender and income level. However, businesses should consider looking even further to define their target customers by factors such as lifestyle, needs and desires,” says Amber Goodenough, co-founder of Fourfour Media. Speaking with Businessnewsdaily.com, she continues to say looking at these more personal interests will connect you to your customers more, giving you insight into what will really meet their needs and solve their problems. So you also need to work out what the competition are all about: who they are, what they offer, how much they charge, how well-known they are, and if their reputation is squeaky clean or not. Then you can set about to beat them!
3. Your operational plan
In this section of your plan, you’re explaining how you’re going to make your ideas and dreams reality. You must not be under any illusions here – just because you’ve written down what you’re going to do, it doesn’t mean you can ignore it. You must follow your plan as closely as you can, and ensure you’re entire team are on board with it too.
This is the part where you answer any questions investors or similar will have. You’ve outlined what you’re goals are in your intentions, but it’s this section that needs you to fill in the gaps. Why would an investor be interested in your business if you haven’t bothered to explain each detail? You’ve pitched your idea, but you’ve got to ask yourself objectively if you’d buy into your business. Try presenting your plan in front of trusted (preferably business-savvy) friends and family, as they’re going to spot holes in what you’re saying and can help you add information.
If you do include a team page like we mentioned above, perhaps incorporate the staff which perform different roles into your presentation. If your manager does a certain, and crucial, part of the day to day then mention that’s their responsibility. You’ll show you’re not only a team player but care about the business and people related to it too.
4. Where your funding is coming from
This is one of the things you need to include because without doing so, other investors may decide to think twice about you. In all likeliness, you’ve put a lot of your own money into this venture, believing the risk will pay off. Don’t hide this fact – shout about the fact you believe so much in your business that you’re prepared to put your life savings into it.
One option is to get seed funding. It’s the earliest funding that you may be able to attract into your startup and is usually a low figure as your business is still in the conceptual phase. Many entrepreneurs ask their friends or family, as it’s not as much of an investment as some may think. Just remember when you’re looking at more professional investors that almost all of them wants a return on their investment, not just to make you happy!
5. Granular forecasting and scenario planning
When you’re building your business plan, you ned a strong idea of where your cash is and where it will be in the near future. Employing a budget and cash flow forecast is best practice – right from startup level. Working your cash plans into your business plan will make potential investors, and your team, understand how successful you may be. You must use both your budget and your forecast, so get your potential scenarios into the scenario builder in FUTRLI which will help you think outside the box and make contingency plans in case anything goes awry. Input your predicted fixed costs (do some research to make sure your figures stack up) and make that your base scenario. From this, create another scenario and link it to your base assumptions. Do this three over for your best, worst and middle of the road expectations.
Share all of this information with your team so you know everyone’s working towards the same goals. Implementing KPIs allow each and every person aware of their responsibilities and targets as individuals and as a team. To find out more about KPIs, have a look at our beginner’s guide, our industry-specific KPI lists and our fully stocked KPI Library.
When we caught up with Anna Carthew, Marketing Manager at The Peloton – a firm which combines marketing and accountancy for their clients, she told us they work from the ethos of ‘what is measured is managed’. Setting up KPIs for her clients, she told us that the firm isn’t afraid to make those metrics specific to the individual. If you’re a bit stuck with selecting your KPIs, ask your accountant. Anna says, “We make the targets personal so the clients really get what they want to get out of it, so we might measure things like how much time they’re saving this week to spend with their kids.” So remember, they’re designed to help you and your business and shouldn’t be too generic. Read the full case study with The Peloton here to see what other tips Anna has.