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For even the most organized and motivated entrepreneur, writing a business plan can be a daunting task. After all, your business plan is your first opportunity to make critical evaluations of your idea, and to view it from the perspective of different stakeholders.
Below, we will discuss some of the universal best practices that apply to any business plan. To ensure that we’re promoting the most up-to-date best practices for writing a business plan, we asked a few successful business strategists and financiers what guidance they have for entrepreneurs new to formal business planning.
Bertie Stevens, Co-Founder and CEO of Flubit.com
- Keep it simple: Creating a coherent plan doesn’t mean writing a 100 page tome. Getting your idea down on paper will help you formulate your thinking and will ensure you have thought through how you are going to get your business off the ground, what resources you need and what your objectives are. If you are looking for investment or are looking to build a team, a clear, credible plan is necessary to get those individuals interested in being part of your business. Aim to keep your plan as succinct as possible.
- Create a simple forecast: Show how your business will grow in the short, medium and long term and clearly demonstrate what the end goal is. If nothing else, it will show how feasible your business is and how far it could go. But be realistic and conservative – it’s better to underestimate your cash position at any one time than vice versa.
- Tell a story: You want people to be excited by your business, so clearly show how you are solving a problem, doing something groundbreaking or creating something that has global potential.
- Understand your customer: Clearly show you’ve done your research and understand where the market is for your product or service, how big the potential is, who is going to buy it and why they need it.
- Tell the truth: Make sure you know your numbers back to front and only include information and data that you can back up with hard facts and stats. It’s tempting to exaggerate claims, but be prepared to be challenged.
Related: The 15 Minute Business Plan
Shweta Jhajharia, Principle Coach and Director at The London Coaching Group
- Start with a review of the past and present: Before you start planning for the future, you need to have a firm grasp of what you have done in the past and where you currently stand. By asking yourself the following questions, you will set yourself up for determining the best course of action going forward, with a more focused, relevant and useful plan:
- Has my team been working effectively and productively? Why/why not?
- What goals/milestones have I achieved in the last year?
- What impact and difference has this made to the business?
- What were my profits over the last quarter?
- What have I not achieved that I intended to? What impact has that had?
- What do I need to carry over and what do I need to drop from that list of things to achieve
- Set personal as well as business goals: In my experience as a business coach in London, we find that the drive to achieve business success is stoked by the knowledge that your success in business enables you to achieve your personal goals. Set personal goals and see how they synchronize with your business goals so that you are more motivated to achieve both together. Some quick tips for writing goals:
- We find the best way to actually achieve goals is to define long-term goals (five to 10 or more years), then break those down into three year goals and then into one year goals.
- Write emotively and write in present tense. For example, “I feel elated and humbled to have completed the Kokoda track on Anzac Day 2016.” This creates a deeper connection to your goal and comes from envisioning success already having happened rather than “working” towards it.
- Don’t just write goals; craft a plan: When you create a solid plan, it becomes a lot clearer what is and isn’t achievable over the next year. You can also see what actions you will need to take on a regular basis and create a default diary where you can block out time every week to get those regular tasks done.
- Categorize: Group your one year goals into categories (travel, family, social life, community etc.). You can also extract your business goals from this and further categorize, if required (e.g. marketing, recruitment and finance, etc.).
- Prioritize: Categorizing allows you to then prioritize more easily. Choose just one goal in each category and highlight that as your most important to achieve.
- Actions required: This is the important part. Next to each goal, write down what you actually need to do to achieve it. Get specific, be realistic.
- Divide: Now you have a list of actions to achieve over the year. Split those out over the four quarters. If you can, split them out over the 13 weeks of each quarter, too.
- Always assign accountability: You now have all of these actions for your business, but you also need to clarify who is going to achieve them. You should draw up an “accountability chart” in your plan which clearly shows all the important functions of your business and exactly who is in charge of what function. These functions may include things such as head of company, marketing, R&D, finances, sales and recruitment, etc. These required functions should be clear from when you categorized the goals for your business. Even if you are a one-man-band, this is an important exercise. You may be doing everything yourself, but you still need to wear different “hats” to ensure that all aspects of your business are being dealt with. Organizing yourself this way will make it much easier to bring on team members when you eventually get to that stage, as processes will already be in place.
Anna Morrish, Marketing Executive at DMC
- Write for your audience: The most common business plans are written for investors, lenders and current employees. Know which one you’re targeting and write the plan with them in mind. For example, if you’re writing a plan for a potential investor, it needs to get to the point swiftly, as they don’t want to spend their time reading a long business plan full of irrelevant information. Provide informative ideas which will get them interested in your business. Don’t try to pack every piece of information into the plan, but just enough to make them want to meet with you to discuss your ideas in much more detail.
- Know your competition: Don’t become blind sighted by your excellence. You may believe you’re the best in the business with no threat of competition, and maybe that is the case, but if you’re creating a plan for investors, they want to see that there is a market for your business. If there is no competition, where is the market? Make it clear in your business plan how you’re going to compete. The use of charts, graphs and images will provide factual and visual evidence which can help to back up your potential ideas.
- Look to the future: Show your audience where you see the business progressing to in the future. Set clear realistic goals for individuals, plans to reach those goals and what the result of reaching those goals will be. If you’re directing your plan at an investor, make sure to include how they will financially influence and benefit the company, and tell them exactly what they are able to get out of the business to benefit themselves.
- Make sure you communicate: Communication is key to a successful business plan. The simple but effective act of writing down ideas will help everyone understand and support your clear, well thought through goals, ensuring you’re all on the same page so that the plan can be followed and work effectively.