How To Make A Business Plan

How to make a business plan: the way in which a business plan is structured will determine investor interest so ensure key issues such as risk, revenue and returns are addressed.

The presentation of a business plan can mean the difference between a potentially lucrative project being turfed into the wastebin or enthusiastically accepted by a prospective investor. The basic structure is important.

Begin with a Cover Page displaying your company's specific logo or brand. This will indicate a professionalism and a desire to be taken seriously.

The next section is the most important, the Executive Summary. This is the first and most widely read part of any business plan so make sure the summary packs the necessary punch. Briefly explain your revenue model, market potential and how this venture will rake in the cash. Illustrate the difference between your business model and those of your competitors, what delineates your idea and sets it apart. Keep this short, three pages at most.

Include a table of contents for easy reference.

The Business Description forms the meat of the proposal. A short description of the company, your products and the method of business is necessary. Aleviate investor concerns by addressing into what sector this business will fall, how advanced the development of your product is at this stage, from where revenue will be sourced and explain the competitive advantage your business will enjoy. Explain the focus of your service or product, as investors are often scared off by vague and tenuous plans.

The next crucial section relates to the Market Opportunity of which you intend to avail yourself.

You'll need to explain the market gap or industry need that your service will fulfil, describing the state of that industry to the investor. Through a detailed market analysis, convince investors that your timing is right and that there is a significant market demand. If you have an existing business or other investors who have already been willing to back your venture, mention this, it shows that others believe in your credibility.

The following section covers the risk and critical success factors. Candidly set out the risk involved of the enterprise and explain how these will be addressed by your enterprise.

Differentiate between external risks - such as government regulations on your proposed enterprise, economic recesssions and market fluctuations - and internal risks, such as the necessary speed of the project, deadlines and the cash amounts involved.

Explain too the risks incurred should the supporting factors upon which your success depends not materialise.

Cover all the bases and present the appearance of a thoroughly researched market sector with nothing left to chance.

Another important issue that will need to be addressed is how you intend to market and promote the enterprise. Illustrate to the investor that you have highlighted the target market and explain ways in which your service or product will be marketed to that sector. Identify the demographics (age, income group and similar) and explain your strategy. Cite any relevant market research which you have at your disposal.

Following on from this, a sound business plan will need to explain how daily operations will be carried out. Explain the legal structure, the management team, number of employees and incentives for these employees. Detail the supply chain process, outsourced business functions, and the timeline for technological upgrades.

The management team will be something that investors will examine closely. Investors will need to know that the venture is in sound hands and will therefore look for solid expertise and experience. Teams of industry experts, often academics or people with solid credibility in the sector will improve investor confidence.

The crucial backbone to the proposal will be the financial statements. These include current and past bank statements, financial projections as to the business growth, expense and revenue projections and other variables within the specific sector.

Cash flow statements are also a vital ingredient and a balance sheet listing the assets and liabilities of the company should also be included.

A more comprehensive statement will also include a 'Break Even Analysis' determining at what point the enterprise will return a profit and a 'Return on Investment' analysis.

Use these financial statement to draw up a financial analysis. This will include 'highlights' from the statements and will often make use of graphs and flowcharts. At the back of the document, attach more detailed information in the appendix. Ensure that the appendix is no longer than ten pages.

Throughout all, the emphasis should be on presenting a realistic attainable and justified picture of a profitable business.

© High Speed Ventures 2011