It's easy to feel at a loss when putting together a business plan for investors, as it's a task that many entrepreneurs find pretty daunting.
Many questions arise when trying to prepare an effective business plan: where do I begin? How do I proceed? How should I organise my plan? What should I include in it?
If your head is fried, then don't worry - as The Business Plan Shop is here with 7 business plan tips for putting together an attractive plan for investors.
Business plan tip #1: Carry out market research
Any business plan should start with a market analysis. This includes a detailed analysis of supply and demand on the market. The main goal of the market analysis is to confirm there is an untapped business opportunity within your area.
A market analysis should also contain a study of industry trends, purchasing behaviours and consumer habits, along with a comparison of existing competitors.
Take time out of your day to have a chat with customers, and talk to different market players over a coffee (such as suppliers, competitors and partners, etc.). Your research needs to span beyond the online realm.
Business plan tip #2: Get quotes from your potential suppliers
Costs and investments are a really important part of your business plan financial forecast.
It's important for you to be precise, and make a list of all the resources required to start and run your business: rent, gas and electricity bills, material, furniture, stationery, cleaning and maintenance, insurance, staffing costs, accountant and lawyer fees, training costs, marketing and advertising, communication, travelling expenses, etc.
Once all costs have been listed, you can determine how much each are. Some costs can be easy to estimate just by looking at prices online or in your favorite shop, whereas others are more difficult to decipher - this is where you ask potential suppliers for a quote.
This also allows you to take into account the terms of your commercial contract (when it comes to supply frequency and payment terms).
Business plan tip #3: Don't forget about seasonality
The activity of every business is impacted by seasonality, whether it be school holidays, tourism, family holidays, activity decrease in July and August for professional services, or even activity increase during Valentine's Day or Mother's Day.
Seasonality has a large impact on how much turnover your business gets, and consequently, how much cash is available. It is essential for you to take it into account when doing your business plan's financial forecast, and make sure you have enough cash when you reach low season, or predict a bad one coming up.
Business plan tip #4: Make sure you anticipate what could go wrong
It's good to be optimistic when starting your business, however, it's common knowledge that things don't always go according to plan:
- It could take more time to start your activity than you initially thought it would
- Even if you plan on working day and night at the start, days are only 24-hours-long, and you'll have to take time out for your family and get some proper rest
- Unexpected events could also slow you down, such as hours spent on the phone with a supplier, chasing a customer who hasn't paid you yet, a change in the legislation requiring drastic changes to your business, or even a machine breakdown
Contingency planning is key, so give yourself room for manoeuvre when writing your business plan. Make sure you have enough cash to allow yourself to deal with any unexpected events.
A sensible amount to make sure you don't run out of cash usually means 3 to 6 months worth of your costs.
Business plan tip #5: Don't let the financial forecast take priority over the written part
Financials are an integral part of your business plan, but they're not the only thing that matters. Writing your business plan will be as important as putting together a financial forecast.
Writing out your business plan will prevent you from forgetting key details and paint a clearer picture of your project to investors and lenders.
It will provide more explanation with regard to your financials, but also demonstrate that you have exhaustive knowledge in your area, and that your team has the skills and the capacity to bring your project to life.
The writing will also give details on your commercial strategy, your growth objectives and how you're planning to manage the risks linked to your project.
Business plan tip #6: Create your plan with online software
Does the idea of writing the business plan by yourself sound daunting? Do you feel like you can't crunch the numbers by yourself?
Are you looking for a business plan template that will give you an idea of what yours should look like? Would you like to be guided through the process?
These questions can be scary, which is why we've provided these tips to help you write your business plan - but that's not the only way we can help.
If you feel doubtful of your ability to write an expert business plan, we recommend using online business plan software to draft it up.
Using online software will give you the necessary tools to prepare an effective business plan:
- You will be guided with instructions and examples for each section of the business plan
- You will easily put together a financial forecast with the help of a software which takes care of the financial aspects for you
- You will get an professional document, formatted and ready to be sent to the bank and/or investors
Wondering if this could be the best solution for you? Check out our software for free by registering here.
Business plan tip #7: Ask someone to proof-read your plan
For your business plan to convince lenders and investors, it's crucial to have a concise and direct tone, and to avoid any professional jargon.
Along with making sure you haven't missed any spelling or grammatical mistakes, having your work proof-read by someone whose not familiar with your industry will allow you to make sure you haven't used any obscure language. Lenders and investors are generally not experts in your area, therefore it's important for you to make the content easily digestible.
We hope our 7 business plan tips were helpful, and that you will be able to create a tailored and effective business plan to convince lenders and investors.
Please do not hesitate to get in touch if you have any questions regarding our business plan tips. We'll be happy to help!
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