Things are going pretty well. Sales are on the up. The bank account seems to be in good shape. But my team are asking where are we going? How much can we spend on new computers? How much are we going to spend on marketing?
All of a sudden those good feelings turn to sleepless nights. It is essential as a business grows that you have a plan for the future – where is the next set of sales coming from, how many extra staff will be needed, what geographic area do we move into, can we buy another vehicle.
If you wish to raise money or look to realise the value of your company through a trade sale, a Business Plan is the common vehicle used to communicate details of the company.
To start a business you have to have a great idea … and you must be able to sell it into a market. Many start-ups we see have great ideas, but do not know how to market that idea properly. Quickly money dries up and you are pushed to look at financing the company or persuading family and friends to support you.
To get your thinking straight you need to produce a business plan. It shows that you have thought through many of the issues and understand how to manage the business.
This document is your way to convince others that you have a good business proposition that it is likely to make money and give a return to those investing in it.
You must persuade investors that you understand your business and that you are the best person to run it. You must also demonstrate that you have the necessary drive and commitment to deliver the plan and can hold the vision over years.
This is usually produced as a document as the level of detail is high. With better tools visual imagery is being included more frequently, such as pictures, graphs and graphics, even videos. Sometimes, it may be better to produce a pitch deck in PowerPoint; a set of slides that give a clear overview of the business. Rarely does this have sufficient detail and needs the support of a document.
Comments are always a plus - client quotes show that you perform well and referenced comments from industry show that your research has foundation.
A business plan can be anything from around 10 pages to 30, excluding the appendixes. Remember that those reading the plan will be reading many other plans so remove any waffle. When you proof read the document, think whether each sentence adds value or whether it is padding. Superfluous material will detract from your plan.
The details contained here are a guide. They are not a prescription to creating a plan; you must choose the titles, sections and what you think is important. You will find many formats of plan on the Internet, covering similar detail in different ways. Your choice is to choose a form that is suitable for your business and for the purpose for which the plan is intended. If it is difficult to read or understand it will not get the consideration due.
This is the first and often, the only part of the plan that is read by investors. If you cannot convince someone that the plan is of interest in a single page, or a few PowerPoint slides, then they will not read on.
It needs to summarise the key facts – your proposition, the market potential, how you will market the product and sell it, why you can succeed and the financial returns.
This describes your product in some depth and the plans you have for it. It needs to highlight any patents, IP or copyright that you have, or will be applying for. This section will describe how it is different in the market, what makes it unique in the markets where you will be selling the product.
This section outlines how you see the company developing, e.g. nationally, internationally, franchising and over what timescale. Describe the external face of the company and its image. Maybe you see the vision as being bought by a larger concern, or quoted on the stock markets.
This is where details of your market research are covered. How big is the market; what penetration you are expecting to achieve; geographic or demographic details?
What is the competition? How are they changing? How will you adapt?
This, together with the section on sales, is an area where you must be clear and go into detail. Investors want to understand how you will generate interest in your product or service, how you will attract potential clients and how you will maintain their interest. They also want to understand the costs, the messages you are giving and what makes the product unique to each market area.
The use of “personas” has become a respected way of looking at the marketing and sales approach. Itemise the messages for each persona.
You need to detail what digital marketing you will be using as well as what advertising you will adopt, what emailing you will undertake and shows you will attend. Explain how you intend to reach your potential markets, the messages you are using and how each of them interact. For each of these you need to describe the outcome you expect for each campaign and over what timescale you expect to gain the interest.
Give some details about the web-site and what the calls to action are on the site. Identify how you will aim to increase visibility of the web-site and why those techniques are being adopted.
Generalisations will be held against you. For example, stating that you will use Twitter to raise your profile, or that you are using SEO, will not be of value. You need to explain how you are using those tools and why.
Finally you need to explain what records you will keep in order to check on the effectiveness of each campaign.
Describe the sales process, from first interaction to closing the sale. If you have statistics within your market sector, then use those in your explanations.
Explain the timescale for a sale and the process. Give indicative values of a sale, how and why will it vary. Explain who is typically involved in the purchase process and how do you keep their interest.
Highlight low-hanging fruit, i.e. sales that can be won quickly. Who will be the first targets and why.
How will you manufacture the product, or how will you deliver the service. How will you ensure continuity of the supply chain?
Outline what qualities make you the right person to run the business. Highlight the key skills of you and your key staff. Identify any gaps in those skills and how you intend to fill them, e.g. consultants, recruiting.
Explain how will you recruit new staff and the size of pool for recruitment. Outline why will they remain with you in the medium term and how do you expect your staff to grow.
Show how do you see the size of the organisation evolving and what management groups will be needed.
Where will you operate from, what infrastructure is needed? When will you have to move into other premises and what is the cost in so doing?
Highlight the key finances, especially explain the amounts spent on marketing and product development. Highlight the expected returns and how it compares with the market norm. Explain deviations.
Try 'what-ifs?' For example...
You need to show that you have thought in general how to deal with adversity and that you believe that you can cope.
Each CV should be limited to 3 pages. Concentrate on the areas demonstrating the skills necessary for that person to deliver in their part of the business.
If you are submitting the document electronically, then include the spreadsheets themselves, not print-outs. Those reading it can then see how well you have modelled the business.
Supply any product sheets and marketing material. Show sample web pages.
Give any statistics on marketing work already undertaken, e.g. Number of hits and number of leads resulting.
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Last updated: 29 January 2019 | © KIS Finance 2018 |