Sunday, May 17, 2009

Writing a Business Plan


A business plan is, in essence, a map of your route to success. Not every business will immediately see the need to write a business plan but there are many good reasons for taking some time out for this task. It is rarely ever a wasted or non-value adding effort.

Business plans:

• Make you think through your plans for the start of a new, or development of an existing, business in a logical and objective manner;

• Help you identify and focus on key areas required for the success of the business;

• Help you to identify specific problems that may arise and also to identify their solution;

• Help you to identify opportunities and how to capitalise on them;

• Assist in securing funding from banks, venture capitalists, government bodies etc.

A good business plan will contain a discussion of each of the following:

• A description of your business and why you believe it will succeed;
• Details of the Market that you have identified for the goods or services you will offer;
• Your sales and marketing strategy for accessing your target Market;
• Details of how your business will be organised and managed;
• A summary of the skills and experience of the key individuals involved in the business;
• Past and projected financial statements, including cash-flow analysis, Profit & Loss Account, Balance Sheet and details of key assumptions used in forecasts.

Using Template Business Plans

Sample business plans can be found from a wide variety of sources, including your local enterprise board, your accountant, your bank and of course the internet. There is no “one size fits all” business plan. Some are much more detailed than others and some place a greater emphasis on different aspects of the plan. This is simply because no business is the same and, as every business is unique, every business plan will be unique. If you are finding the process a little overwhelming at first, the best place to start is with a discussion of the six areas listed above and to flesh out your plan as necessary from there.

I have seen many people get bogged down and frustrated in writing a business plan when they are trying to adhere too strictly to a template that they have found. Remember that a template is only a guide and you should feel free to leave out details that may appear in a template which are not relevant to your business and to expand on, or even create new, sub-headings which will better explain the objectives and methodology of your own particular business.

How long should a business plan be?

Business plans can vary in size from a one page summary to any number of pages. Your plan should be as long as it needs to be in order to explain all the important points in a concise manner. It is important to avoid repetition and needless detail or padding. Due to the nature of the business, some plans will need to be longer and more complex than others, but all good business plans should be as brief and to the point as possible.

The users of the business plan should be able to navigate the plan quickly so they find the sections that are most relevant to them quickly. The use of appendices to the plan is advised for more in-depth information that you may wish to include e.g. financial projections, lists of existing sales orders, CVs of the promoters, detailed findings of market research etc.

For many small owner-managed businesses, a business plan of no more than 3 pages (excluding appendices) is very often sufficient for the purpose for which the plan is being written.

Who are you writing the plan for?

The intended user of the business plan should influence the final version of your business plan. For example, if you are writing a business plan for a bank in order to secure a business loan, it is important to focus on the issues which are likely to be important to the bank e.g. the basis of your financial assumptions, details of the income sources for the business, details of profitability and cash flows. If you have already identified potential customers, or agreed contracts, it is very useful to include these in an appendix in order to demonstrate the financial viability of the business to the bank.

If you are writing a business plan in order to gain advice or assistance from a mentor, you may be likely to include more details of the operational processes of the business than would be necessary to show to a bank e.g. day to day management information, marketing and sales strategies.

In summary:

What do I want to achieve from writing a business plan?
• Who will read my business plan and what I am seeking from this reader?

Keeping these two questions at the forefront of your mind will help you to retain your focus and a clear structure as you write your business plan.

A sample business plan is available on request from Fenero. Our advisors are happy to provide assistance in preparing your business plan or to offer feedback and advice on your existing business plans. Contact us now; we look forward to hearing from you.

Fenro Contact Details:

Fenero Tax & Accounting
Fenero Financial Services

Telephone: +353 (0)1 9023979
Post: Unit 10, Block B, Tyrellstown Town Centre, Dublin 15.
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