How to Build a Successful Business Plan

April 3, 2013 • Article • 2509 Views

How to Build a Successful Business Plan

• Clarity: keep language simple, go easy on adjectives, one idea per sentence, tabulate
• Brevity: Prune & prune again, essentials in, lush descriptions out
• Logic: Facts & figures, logical sequence to ideas, consistent
• Truth: don’t overstate
• Numbers: Lenders & Investors are numerate, words alone will not impress

What You Need to Show

• A brief statement of your objectives
• Your assessment of the market you plan to enter
• The skills, experience and finance you will bring to it
• The particular benefits of your product/service
• How you will set up the business
• The longer term view
• Your financial targets
• The money you are asking for and how it will be used
• Appendices to back up previous statements, especially financial projections
• History of the business (where appropriate)

Take account of

• Tech-heads vs. Commercial reality
• Be clear about exactly what you are about. Manufacture/sales/service/all three! Know your skills & resources
• Show clear line of development from innovative research to marketable product
• Excite with your market first, than describe your product/service
• Who is running the show, have a management structure, show balance of design-led & market-led
• Ditch the jargon
• Show you’ve taken on the boring aspects as well as the exciting

Key Ingredients of the Business Plan

Person profile

• Realism
• Experience
• Strengths and Weaknesses

Business Profile

• the Product/Service
• the Demand
• the USP
• Access to information

Market and competitor analysis

• Industry risk
• Threats and opportunities

Management profile

• Realistic assessment of management skills needed and available
• Team skills
• Contingency

Borrowing proposition

• Sources of capital
• Adequacy of funding sought
• Repayment capacity
• Funds Flow
• Debt service capacity after capital expenditure and drawings

Downside analysis

• Breakeven analysis
• Sensitivity analysis

Key factors

• Timing, Costs, Interest rates
• Protections
• Access to further available funds
• Asset backing
• An exit strategy , if needed

Covenants and controls

• Key Performance Indicators
• Key covenants

And remember

Napoleonic plans of tremendous breadth and vision are fine, but Wellington’s attention to detail won him the battle of Waterloo!

• ← Accountants who go the extra mile
• Financial Success →