Like hikers going into rough terrain without map and compass, entrepreneurs who fail to fashion business plans are likely to get nowhere. It won’t guarantee success, but crafting the annual plan improves the odds in favour of your business. When raising capital or soliciting credit, a business plan is indispensable. A convincing business plan will set achievable goals, reveal business strengths and weaknesses, and paint realistic action steps for hitting your targets. Once it’s published, be prepared to change course as your plan meets reality. Only then will it be worth the paper it’s written on.
- In a few broad strokes, introduce your business: its history, mission, your vision, key operations, legal basis, principals, and your business goals and objectives. Garner the reader’s interest; lay the foundation for what follows. Put your best foot forward, but be cool and let facts rule.
- Define the context in which your business operates by describing your industry, the market that you plan to attack, your competition or lack thereof, and your customers. Demonstrate here that you understand your environment and make the case that it proffers profitable opportunities. Be succinct.
- Describe your products and services and what makes them competitive: price, features, customer service.
- Present your organization chart and an operations flow chart. Briefly profile your key business operations, employees and managers and their respective roles in implementing the strategy.
- Paint your historical and projected financial picture, including a break-even analysis. If you have an established business, document and discuss the past three years’ results. Be realistic here. If you’ve been growing at 5 percent per year, forecasting a 25 percent increase in annual sales will need to be justified.
- Bring it down to earth: turn the lofty plan into concrete action steps married to a time line. Say what will be done, when, by whom and what the inputs and expected results will be at each milestone. This shows that you are prepared to monitor and adjust your plan systematically.
- Prepare an executive summary that details your business’s strengths and weaknesses and focuses on the key points of your plan. You also make it easier for your audience to digest the business plan document. (The summary becomes the preface to your plan document.)
- Conclude your business plan with an appendix containing all supporting documentation.