How to write a business plan for a holding company (manual)?

Creating a business plan for a holding company (manual) is an essential process for any entrepreneur. It serves as a roadmap that outlines the necessary steps to be taken to start or grow the business, the resources required, and the anticipated financial outcomes. It should be crafted with method and confidence.

This guide is designed to provide you with the tools and knowledge necessary for creating a holding company (manual) business plan, covering why it is so important both when starting up and running an established business, what should be included in your plan, how it should be structured, what tools should be used to save time and avoid errors, and other helpful tips.

We have a lot to cover, so let's get to it!

Why write a business plan for a holding company (manual)?

Understanding the document's scope and goals will help you easily grasp its structure and content. Before diving into the specifics of the plan, let's take a moment to explore the key reasons why having a holding company (manual) business plan is so crucial.

To have a clear roadmap to grow the business

It's rarely business as usual for small businesses. The economy follows cycles where years of growth are followed by recessions, and the business environment is always changing with new technologies, new regulations, new competitors, and new consumer behaviours appearing all the time...

In this context, running a business without a clear roadmap is like driving blindfolded: it's dangerous at best. That's why writing a business plan for a holding company (manual) is essential to create successful and sustainable businesses.

To write an effective business plan, you will need to take stock of where you are (if you are already in business) and where you want the business to go in the next three to five years.

Once you know where you want your holding company (manual) to be, you'll have to identify:

what resources (human, equipment, and capital) are needed to get there,
at what pace the business needs to progress to get there in time,
and what risks you'll face along the way.

Going through this process regularly is beneficial, both for startups and existing companies, as it helps make informed decisions about how best to allocate resources to ensure the long-term success of the business.

To get visibility on future cash flows

If your small holding company (manual) runs out of cash: it's game over. That's why we often say "cash is king", and it's crucial to have a clear view of your holding company (manual)'s future cash flows.

So, how can you achieve this? It's simple - you need to have an up-to-date financial forecast.

The good news is that your holding company (manual) business plan already includes a financial forecast (which we'll discuss further in this guide). Your task is to ensure it stays current.

To accomplish this, it's essential to regularly compare your actual financial performance with what was planned in your financial forecast. Based on your business's current trajectory, you can make adjustments to the forecast.

By diligently monitoring your holding company (manual)'s financial health, you'll be able to spot potential financial issues, like unexpected cash shortfalls, early on and take corrective actions. Moreover, this practice will enable you to recognize and capitalize on growth opportunities, such as excess cash flow enabling you to expand to new locations.

To secure financing

Whether you are a startup or an existing business, writing a detailed holding company (manual) business plan is essential when seeking financing from banks or investors.

This makes sense given what we've just seen: financiers want to ensure you have a clear roadmap and visibility on your future cash flows.

Banks will use the information included in the plan to assess your borrowing capacity (how much debt your business can support) and your ability to repay the loan before deciding whether they will extend credit to your business and on what terms.

Similarly, investors will review your plan carefully to assess if their investment can generate an attractive return on investment.

To do so, they will be looking for evidence that your holding company (manual) has the potential for healthy growth, profitability, and cash flow generation over time.

Now that you understand why it is important to create a business plan for a holding company (manual), let's take a look at what information is needed to create one.

What information is needed to create a business plan for a holding company (manual)?

Writing a holding company (manual) business plan requires research so that you can project sales, investments and cost accurately in your financial forecast.

In this section, we cover three key pieces of information you should gather before drafting your business plan!

Carrying out market research for a holding company (manual)

Carrying out market research before writing a business plan for a holding company (manual) is essential to ensure that the financial projections are accurate and realistic.

Market research helps you gain insight into your target customer base, competitors, pricing strategies and other key factors which can have an impact on the commercial success of your business.

In particular, it is useful in forecasting revenue as it provides valuable data regarding potential customers’ spending habits and preferences.

You might discover that customers may be more likely to purchase products from your holding company if they are able to access them online. Additionally, you could find that customers may be more likely to purchase products that offer additional features, such as free shipping or discounts.

This information can then be used to create more accurate financial projections which will help investors make informed decisions about investing in your holding company (manual).

Developing the sales and marketing plan for a holding company (manual)

Budgeting sales and marketing expenses is essential before creating a holding company (manual) business plan.

A comprehensive sales and marketing plan should provide an accurate projection of what actions need to be implemented to acquire and retain customers, how many people are needed to carry out these initiatives, and how much needs to be spent on promotions, advertising, and other aspects.

This helps ensure that the right amount of resources is allocated to these activities in order to hit the sales and growth objectives forecasted in your business plan.

The staffing and capital expenditure requirements of a holding company (manual)

Whether you are starting or expanding a holding company (manual), it is important to have a clear plan for recruitment and capital expenditures (investment in equipment and real estate) in order to ensure the success of the business.

Both the recruitment and investment plans need to be coherent with the timing and level of growth planned in your forecast, and require appropriate funding.

A holding company (manual) might incur staffing costs such as salaries for employees, benefits, and payroll taxes. They may also incur costs for equipment such as computers, desks, office supplies, and any other necessary tools. Additionally, they may need to pay for office space, phone lines, and internet access.

In order to create a realistic financial forecast, you will also need to consider the other operating expenses associated with running the business on a day-to-day basis (insurance, bookkeeping, etc.).

Once you have all the necessary information to create a business plan for your holding company (manual), it is time to start creating your financial forecast.

What goes into your holding company (manual)'s financial forecast?

The objective of the financial forecast of your holding company (manual)'s business plan is to show the growth, profitability, funding requirements, and cash generation potential of your business over the next 3 to 5 years.

The four key outputs of a financial forecast for a holding company (manual) are:

The profit and loss (P&L) statement,
The projected balance sheet,
The cash flow forecast,
And the sources and uses table.

Let's look at each of these in a bit more detail.

The projected P&L statement

The projected P&L statement for a holding company (manual) shows how much revenue and profit your business is expected to make in the future.

example of projected profit and loss statement in a holding company (manual) business plan

A healthy holding company (manual)'s P&L statement should show:

Sales growing at (minimum) or above (better) inflation
Stable (minimum) or expanding (better) profit margins
A healthy level of net profitability

This will of course depend on the stage of your business: numbers for a startup will look different than for an established holding company (manual).

The forecasted balance sheet of your holding company (manual)

The projected balance sheet of your holding company (manual) will enable the reader of your business plan to assess the overall financial health of your business.

It shows three elements: assets, liabilities and equity:

Assets: are productive resources owned by the business, such as equipment, cash, and accounts receivable (money owed by clients).
Liabilities: are debts owed to creditors, lenders, and other entities, such as accounts payable (money owed to suppliers).
Equity: includes the sums invested by the shareholders or business owners and the profits and losses accumulated by the business to date (which are called retained earnings). It is a proxy for the value of the owner's stake in the business.

projected balance sheet in a holding company (manual) business plan example

Analysing your holding company (manual) projected balance sheet provides an understanding of your holding company (manual)'s working capital structure, investment and financing policies.

In particular, the readers of your plan can compare the level of financial debt on the balance sheet to the equity value to measure the level of financial risk (equity doesn't need to be reimbursed, while financial debt must be repaid, making it riskier).

They can also use your balance sheet to assess your holding company (manual)'s liquidity and solvency:

A liquidity analysis: focuses on whether or not your business has sufficient cash and short-term assets to cover its liabilities due in the next 12 months.
A solvency analysis: takes and longer view to assess whether or not your business has the capacity to repay its debts over the medium-term.

The cash flow forecast

A projected cash flow statement for a holding company (manual) is used to show how much cash the business is generating or consuming.

cash flow forecast in a holding company (manual) business plan example

The cash flow forecast is usually organized by nature to show three key metrics:

The operating cash flow: do the core business activities generate or consume cash?
The investing cash flow: how much is the business investing in long-term assets (this is usually compared to the level of fixed assets on the balance sheet to assess whether the business is regularly maintaining and renewing its equipment)?
The financing cash flow: is the business raising new financing or repaying financiers (debt repayment, dividends)?

As we discussed earlier, cash is king and keeping an eye on future cash flows an imperative for running a successful business. Therefore, you can expect the reader of your holding company (manual) business plan to pay close attention to your cash flow forecast.

Also, note that it is customary to provide both yearly and monthly cash flow forecasts in a business plan - so that the reader can analyze seasonal variation and ensure the holding company (manual) is appropriately funded.

The initial financing plan

The sources and uses table or initial financing plan is a key component of your business plan when starting a holding company (manual).

It shows where the capital needed to set up the business will come from (sources) and how it will be spent (uses).

sources and uses table in a holding company (manual) business plan

This table helps size the investment required to set up the holding company (manual), and understand how risks will be distributed between the business owners, and the financiers.

The sources and uses table also highlights what the starting cash position will be. This is key for startups as the business needs to have sufficient funding to sustain operations until the break-even point is reached.

Now that you have a clear understanding of what will go into the financial forecast of your holding company (manual) business plan, let's have a look at the written part of the plan.

The written part of a holding company (manual) business plan

The written part of a holding company (manual) business plan is composed of 7 main sections:

The executive summary
The presentation of the company
The products and services
The market analysis
The strategy
The operations
The financial plan

Throughout these sections, you will seek to provide the reader with the details and context needed for them to form a view on whether or not your business plan is achievable and your forecast a realistic possibility.

Let's go through the content of each section in more detail!

1. The executive summary

In your holding company (manual)'s business plan, the first section is the executive summary — a captivating overview of your plan that aims to pique the reader's interest and leave them eager to learn more about your business.

When crafting the executive summary, start with an introduction to your business, including its name, concept, location, how long it has been running, and what sets it apart. Briefly mention the products and services you plan to offer and your target customer profile.

Following that, provide an overview of the addressable market for your holding company (manual), current trends, and potential growth opportunities.

Next, include a summary of key financial figures like projected revenues, profits, and cash flows.

Finally, in the "ask" section, detail any funding requirements you may have.

2. The presentation of the company

The second section in your holding company (manual)'s business plan should focus on the structure and ownership, location, and management team of the company.

The structure and ownership part provides an overview of the legal structure of the business, who the owners are and how much each has invested and owns. If you are seeking financing it is important that the reader gets a clear picture of which legal entity is receiving the funds, and who controls the business.

The location part should give an overview of the premises from which the company is operating, and why that location is of particular interest (catchment area, accessibility, amenities nearby, etc.).

When describing the location of your holding company (manual), you could emphasize its proximity to a major metropolitan area. This could provide access to a wide range of resources such as an educated workforce, a strong infrastructure, and access to a variety of amenities. Additionally, the area may be well-connected to other cities through transportation networks, providing potential investors with easy access to the location. You might also highlight the region’s tax incentives and business-friendly climate, which could help your holding company succeed. Finally, you could point out the area's diverse culture and vibrant community, which could make it an attractive place to do business.

Finally, you should introduce the management team. Explain each member's role, background, and experience.

It is also important to emphasize any past successes that the members of the management team have achieved, and how long they've been working together, as this will help potential lenders or investors understand why they should trust in their leadership.

3. The products and services section

The products and services section of your business plan should include a detailed description of the offerings that your company provides to its customers.

For example, your holding company (manual) might offer services such as business consulting, bookkeeping, and payroll services. It could also provide products such as office supplies, office furniture, and IT solutions. These products and services could help customers to better manage their businesses and increase their efficiency and productivity.

When drafting this section, you should be precise about the categories of products or services you sell, the types of customers you are targeting and how customers can buy them.

4. The market analysis

When presenting your market analysis in your holding company (manual) business plan, you should detail the customers' demographics and segmentation, target market, competition, barriers to entry, and any regulations that may apply.

The goal of this section is to help the reader understand how big and attractive your market is, and demonstrate that you have a solid understanding of the industry.

You should start with the demographics and segmentation subsection, which gives an overview of the addressable market for your holding company (manual), the main trends in the marketplace, and introduces the different customer segments and their preferences in terms of purchasing habits and budgets.

The target market section should follow and zoom on the customer segments your holding company (manual) is targeting, and explain how your products and services meet the specific needs of these customers.

For example, your target market might include small business owners who are looking for assistance with managing their finances. These customers are likely to need help with planning budgeting, and understanding the tax implications of their investments. They may also be looking for advice on how to minimize their tax liabilities and protect their assets.

Then comes the competition subsection, where you should introduce your main competitors and explain what differentiates you from them.

Finally, you should finish your market analysis by giving an overview of the main regulations applicable to your holding company (manual).

5. The strategy section

When crafting the strategy section of your business plan for your holding company (manual), it's important to cover several key aspects, including your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

In the competitive edge subsection, clearly explain what sets your company apart from competitors. This is particularly critical if you're a startup, as you'll be trying to establish your presence in the marketplace among entrenched players.

The pricing strategy subsection should demonstrate how you aim to maintain profitability while offering competitive prices to your customers.

For the sales & marketing plan, outline how you plan to reach and acquire new customers, as well as retain existing ones through loyalty programs or special offers.

In the milestones subsection, detail what your company has achieved thus far and outline your primary objectives for the coming years by including specific dates for expected progress. This ensures everyone involved has clear expectations.

Lastly, in the risks and mitigants subsection, list the main risks that could potentially impact the execution of your plan. Explain the measures you've taken to minimize these risks. This is vital for investors or lenders to feel confident in supporting your venture - try to proactively address any objection they might have.

Your holding company could face the risk of internal fraud and misappropriation of funds. An employee or third party vendor may take advantage of their access to company assets and resources to embezzle funds or make unauthorized purchases. Your holding company could also face the risk of external security threats. Hackers could gain access to sensitive data or system information, leading to potential loss or theft of company resources. Additionally, cyber-attacks could disrupt business operations, resulting in costly downtime.

6. The operations section

In your business plan, it's also essential to provide a detailed overview of the operations of your holding company (manual).

Start by covering your team, highlighting key roles and your recruitment plan to support the expected growth. Outline the qualifications and experience required for each role and your intended recruitment methods, whether through job boards, referrals, or headhunters.

Next, clearly state your holding company (manual)'s operating hours, allowing the reader to assess staffing levels adequately. Additionally, mention any plans for varying opening times during peak seasons and how you'll handle customer queries outside normal operating hours.

Then, shift your focus to the key assets and intellectual property (IP) necessary for your business. If you rely on licenses, trademarks, physical structures like equipment or property, or lease agreements, make sure to include them in this section.

You might have key assets such as real estate holdings or financial investments. These could represent a significant portion of the company's overall value, depending on the size and scope of the holding company. Additionally, the holding company may have intellectual property such as trademarks or patents that it has registered or acquired through a merger. This IP could give the company a competitive edge in the marketplace or provide it with a source of passive income.

Lastly, include a list of suppliers you plan to work with, detailing their services and main commercial terms, such as price, payment terms, and contract duration. Investors are interested in understanding why you've chosen specific suppliers, which may be due to higher-quality products or established relationships from previous ventures.

7. The presentation of the financial plan

The financial plan section is where we will include the financial forecast we discussed earlier in this guide.

Now that you have a clear idea of what goes into a holding company (manual) business plan, let's look at some of the tools you can use to create yours efficiently.

What tool should I use to write my holding company (manual)'s business plan?

In this section, we will be reviewing the two main options for writing a holding company (manual) business plan efficiently:

Using specialized software,
Outsourcing the drafting to the business plan writer.

Using an online business plan software for your holding company (manual)'s business plan

Using online business planning software is the most efficient and modern way to create a holding company (manual) business plan.

There are several advantages to using specialized software:

You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
You are guided through the writing process by detailed instructions and examples for each part of the plan
You can access a library of dozens of complete business plan samples and templates for inspiration
You get a professional business plan, formatted and ready to be sent to your bank or investors
You can easily track your actual financial performance against your financial forecast
You can create scenarios to stress test your forecast's main assumptions
You can easily update your forecast as time goes by to maintain visibility on future cash flows
You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here.

Hiring a business plan writer to write your holding company (manual)'s business plan

Outsourcing your holding company (manual) business plan to a business plan writer can also be a viable option.

Business plan writers are experienced in writing business plans and adept at creating financial forecasts without errors. Furthermore, hiring a consultant can save you time and allow you to focus on the day-to-day operations of your business.

However, hiring business plan writers is expensive as you are paying for the software used by the consultant, plus their time, and their profit margin of course.

From experience, you need to budget at least £1.5k ($2.0k) excluding tax for a complete business plan, more if you need to make changes after the initial version (which happens frequently after the initial meetings with lenders or investors).

You also need to be careful when seeking investment. Investors want their money to be used to grow the business, not spent on consulting fees. Therefore, the amount you spend on business plan writing services (and other consulting services such as legal services) needs to be negligible relative to the amount raised.

The other drawback is that you usually don't own the business plan itself: you just get the output, while the actual document is saved in the consultant's business plan software - which makes it difficult to maintain the document up to date without hiring the consultant on a retainer.

For these reasons, outsourcing the holding company (manual) business plan to a business plan writer should be considered carefully, weighing both the advantages and disadvantages of hiring outside help.

Ultimately, it may be the right decision for some businesses, while others may find it beneficial to write their business plan using online software.

Why not create your holding company (manual)'s business plan using Word or Excel?

Using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write a holding company (manual) business plan is not advisable. Allow me to explain the reasons.

Firstly, creating an accurate and error-free financial forecast on Excel or any spreadsheet demands technical expertise in accounting principles and financial modelling. Without a degree in finance and accounting and significant financial modelling experience, it's unlikely that the reader will fully trust your numbers.

Secondly, relying on spreadsheets is inefficient. While it may have been the go-to option in the past, technology has evolved, and software now performs such tasks much faster and more accurately.

The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Moreover, software offers ease in comparing actuals versus forecasts and maintaining up-to-date forecasts for clear visibility on future cash flows, as we discussed earlier in this guide. Such tasks are cumbersome when using spreadsheets.

Now, let's address the written part of your holding company (manual) business plan. While it may be less prone to errors, using software can significantly boost productivity. Word processors lack instructions and examples for each section of your business plan. They also won't automatically update your numbers when changes occur in your forecast, and they lack automated formatting capabilities.

In summary, while some entrepreneurs may consider Word or Excel for their business plan, it's far from the best or most efficient solution when compared to specialized software.

Takeaways

A business plan has 2 complementary parts: a financial forecast showcasing the expected growth, profits and cash flows of the business; and a written part which provides the context needed to judge if the forecast is realistic and relevant.
Having an up-to-date business plan is the only way to keep visibility on your holding company (manual)'s future cash flows.
Using business plan software is the modern way of writing and maintaining business plans.

We hope that this practical guide gave you insights on how to write the business plan for your holding company (manual). Do not hesitate to get in touch with our team if you still have questions.