While there is no universal format for business plans; there are specific rules that anyone writing a business plan should stick to. This guide will take you through crucial advice with the aim of helping you to write the best business plan possible.
Being concise is extremely important, and there is no overstating that. And this is not always easy, seeing as even the smallest business has plenty of valuable information that it would need to present to potential investors, lenders, or employees.
However, straddling that line between providing too much information and too few details is crucial. While you don’t want your business plan to appear not thought through enough; you also don’t want to drown the reader in irrelevant information.
Use the correct business plan format
You should aim for 8-12 pages of clear, concise information, typed on one side only and well laid out, so it is easy to read. Keep it simple – put additional information such as market research data in an appendix. Quantify as much as you can – your business plan is likely to be read by people used to dealing with figures.
Correct spelling, grammar and syntax
Besides that, it is also essential to take great care when it comes to spelling, grammar, and syntax while working on your business plan. Not showing enough attention to such details will leave any reader sceptical regarding your business prowess and attention to detail in the boardroom.
And luckily enough, there are plenty of templates for business plans and accompanying presentations you can find online. All you need to do if you want to quicken the process is to find the one that suits your business best. And then fill it with your specific information.
Use a business plan template
Apart from these templates, there are also many types of business plan software you can find. This kind of software solution is designed to expedite the process of coming up with a business plan as much as possible, without compromising on quality.
That said – many investors will appreciate the personal touch of doing all of the research and design in-house instead of resorting to ready-made solutions.
Write the plan yourself
While it is sensible to seek advice from external advisers, it is not a good idea to get them to write the plan for you. Investors and lenders need to have confidence that you personally understand your business plan and can talk about it in depth.
Keep it up to date
A business plan is not set in stone. It should be regarded as a work in progress that will change as new opportunities open up. Your business is unlikely to grow in precisely the way you expect so be prepared to update it and rework it as you go along. Remember your business plan is there to serve you, not the other way round.
Comprehensive but short
Generally, it’s sound thinking to have a five-year plan handy. You shouldn’t always include it in your business plan, seeing as it’s much harder to predict than three-year business performance. However, many investors will want to see it, so it’s useful to have one just in case.
Also, offer only two scenarios for your business enterprise. Investors will be interested in the worst-case and the best-case scenario; don’t fill the business plan with a lot of middle-ground options, as this will muddy the waters and create confusion.
A business plan should be a basis document you can alter to suit the audience. While you may decide to alter your business plan depending on whom you’re presenting it to, make sure not to rewrite it, limiting the level of alteration to the different emphases you place on specific information.
Crucially, its advisable to never introduce different sets of numbers to lenders and potential partners, for example. Shining the spotlight on a particular part of your operation is one thing, and distorting the factual truth is another. Remember this – your business plan is the first presentation of your business that all interested parties will see, nothing will resonate stronger than that first impression!
Make sure to add an appendix
The appendices are where you attach supporting documentation to your plan. It is rarely useful to include detailed evidence within in the plan itself. Instead, summarise the evidence and how it supports your claim, and refer readers to the appropriate data in your appendices instead. This allows your plan to flow better whilst still demonstrating that you have researched thoroughly. It also allows your reader to verify what you say.
Any data you refer to within the plan, such as studies, tables or graphs should be included here. This is also somewhere you can put supplementary material relevant to your project, such as photos of your product, copyright certificates, example designs, technical descriptions. Make sure your appendices are clearly labelled so that your reader can easily find the appropriate information. If your appendices are very long, consider putting them in a separate document, as a bulky business plan can be off-putting.
Include key business plan components
- The business opportunity – who you are, what you plan to sell and why
- Your objectives – personal and business
- Your production methods, where the business will be based, how many staff you are likely to need
- The market – what it is, how big it is, where your product or service fits in, how you intend to sell it
- The competition – who your main competitors are and how your product or service differs from theirs
- Your management team and staff
- Your sales and marketing strategy
- Your production costs and who your suppliers will be
- Any relevant qualifications or experience you have
- Financial projections – profit and loss forecasts for two to three years, a cash flow forecast and balance sheet
- How much money you will raise, what it will be used for, and how and when you intend to pay it back
Non disclosure agreement (NDA)
Use an NDA when appropriate. In the simplest possible terms, this is a document that defines the obligations of the person you show your business plan to; or in order words, their legal inability to disclose the contents of the plan to third parties that are not included in the agreement.
These are also referred to as non-disclosure agreements or NDAs. They are designed to protect all parties in a business arrangement and are standard with all kinds of professional transactions; business plans included. These will be an essential part of your business for as long as it exists, so if you’re not familiar with them – now is the time.
How does it work?
If you were to get into the details, you’d realise that every confidentiality agreement stipulates that neither party (which includes you) won’t divulge any of the data contained or discussed in your business plan. Additionally, every NDA should also have a provision for damages; clearly stating what the party in breach of the agreement would be liable for under penalty of law. In almost every case, this is monetary damage.
Without having such an agreement in place, making a business plan is generally a waste of time. The only thing you are doing is the heavy lifting for people who will have the permission to use your plan however they see fit; though only to some extent, as they’d still have to deal with copyright law. But with a confidentiality clause in your business plan, any breach will leave you entitled to damages. Naturally, you would still have to use the proper legal channels to reach compensation, but that’s the case anyway. And without a confidentiality clause, no court would award you a single penny of damages.
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When to use one?
Generally, any business plan would do well to have a confidentiality statement attached to it. While you may run a successful business in which many of its inner workings are quite public; you may still want to keep certain financial aspects of your company away from public eyes.