By Mark Edwards, General Manager, www.rocketlawyer.co.uk
A successful business almost always starts out with strong planning. A clear and concise business plan not only attracts potential investors, but it also lays out clear objectives and strategies for yourself, to help you concentrate on what matters, growing the business.
Research has shown that start-ups with a brilliant and engaging business plan raise twice as much capital as those without one so it’s testament to the importance of getting it right. It’s an extensive document but don’t rush it as you may end up leaving out important details that can make or break the purpose of the business plan. So here are our three key points to remember for when you’re putting your own plan together.
1. Make sure your executive summary is pin-sharp
First impressions count and as this is the first part of your business plan, start as you mean to go on. If it’s not adequately presented, it could be the last part your potential investor reads so don’t underestimate its importance.
This is your opportunity to outline your business proposal so include a business description, a description of the product(s) or service(s) you are offering and details about the investment you are seeking. Although you need to prove you know the facts and figures inside out, ensure you keep it concise and to the point.
2. Be realistic about your finances
Understandably the figures presented in this plan will be estimates but you still need to prove they are based on realistic calculations. Inflating the figures won’t work as any good investor will question it, so you need to be able to defend your numbers confidently. Key projections to include are employee wages and overhead costs, revenue and sales, the percentage of return you expect from your product/service and your break-even point – the point where profit equals loss. This figure is one investors will be looking out for as they need to think about the return on their investment.
3. Know your stuff
Knowing the ins and outs of your target market is key to any successful business. State who your customers will be including their age range, estimated salary and hobbies etc. and outline how you will target them effectively. Presenting an analysis of your target market will give investors the confidence that you have a solid strategy for building a loyal and profitable customer base.
Most businesses will already have competitors so don’t be afraid to mention them. Hiding them or pretending they don’t exist will catch up with you eventually and will weaken the confidence you previously demonstrated. Use your knowledge of your competitors to your advantage by explaining what you plan to do to ensure people buy from you over your rivals.
Remember to cover the above in each of the main sections of your business plan: the executive summary, a business outline, a marketing plan and strategy, operations and logistics information, a financial plan and a SWOT analysis. The SWOT analysis is optional but may prove to be a valuable addition as it demonstrates the extensive awareness and understanding you have of your business.