The business plan presents your business to a potential investor or financier. It also represents your best effort as the promoter of the business to clarify your plan for the business. The plan must therefore follow a format that will assist its readers to quickly scan and understand the vital data about your business. For these reasons, five elements are critical to the preparation of an investable business plan for starting or growing your business. Here is a guide to help you produce a business plan that will be investment-ready:
1. A Basic Structure: Your business plan must be easy to read. There are certain things that your reader, a financier or investor, is looking for. The basic format of your plan must include the Cover Letter, Title Page, Table of Contents and Executive Summary.
While the cover page explains why you have produced the plan and why the reader should be interested in it, the title page should disclose the name of the business, identify its promoters and brand/product images. The table of contents will help the reader move around the document to find what is where. This should be followed by its contents, which focus on such items like the target audience, products or services and current and projected financials.
2. Executive Summary As Investors’ Pitch:The primary objective of the plan is to attract investors’ interest or secure financing. And, because you, the promoter, is not likely to be present when the plan is being reviewed, its summary has to convey the essence of the document in very few words. It must be short, sharp and, more importantly, it must clearly pitch your proposal. By so doing, a busy investor or financier can get the gist of your story at a glance, with minimum effort.
Your reader will almost always start reading your plan from the executive summary and will only go beyond it when it engages attention and holds promise. It must have the glue that holds the reader, hence it must be presented as a pitch that lures the reader to want to learn more about the business. Because of its importance, it is advisable to leave the writing of the executive summary to the last, even though it comes early in arranging the content of the plan,
3. The Marketing Plan: This is a comprehensive outline of the overall marketing effort of the business. It is the marketing strategy of the business, the blueprint of how it will acquire customers and meet its sales targets. The marketing plan provides information on the product or service, pricing, promotion and estimated sales and revenues. It also includes branding and positioning of the business, target markets, segmentation of its customers, competition analysis, critical success factors and key performance indicators.
4. The Assumptions:These are the things that you consider true for the purpose of developing a strategy and making decisions about the business. These are informed disclosures of the uncertainties and risks that are associated with the enterprise.
Examples of the assumptions of your plan may include, but not limited to, the likely behaviour of your customers, regulations that could impact operations, changes in employee remuneration, number of days in your financial year and interest rates on borrowed capital.
Some assumptions might not be obvious in the plan. However, the ones stated in it must be based on well-researched findings, not the result of guesswork. Nevertheless, the value of your plan, relative to your assumptions, is to serve as a yardstick for determining their correctness or otherwise, by helping to understand and explain variances where they occur.
5. The Financials: The financial information in the plan foretell the trading activities of the business over a number of years. They begin with how the business will source the money it needs to start or continue to run, dovetail into how much it will spend on its various activities, and how much it will generate as income for the business and profits for its owners.
Without delving too deeply into financial analysis, the plan must aim to present figures that indicate a balance between being unduly pessimistic and overly optimistic. It must, however, layout the best case and worst case scenarios, including the framework that will manage the cash flow of the business.
These proven and tested recommendations will fine-tune the working draft of your business plan. As a final step, to get the finishing touch, get your associates or partners to review your final draft prior to submitting it to an investor or a lender.
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