Business Plan (Developing and Writing a Plan for Your Business)

All businesses, small or large, simple or complex, must develop a business plan. And of all the types of business documents, the business plan is by far the most important. It marks the FINAL step before venturing into the business world. A business plan is a written document that describes all aspects of your proposed venture. It includes information about you, your product or service, your customers and competition, your marketing strategy, your management team and your finances. The plan represents the bringing together of all your hard work, research and analysis. It clearly demonstrates to others your commitment to your business.

WHY IS A BUSINESS PLAN IMPORTANT?

• Forces you to take a long, hard look at what you plan to do and how you plan to do it. The plan enables you to identify strengths and weaknesses, and compels you to face issues before they become problems.
• Becomes an operating tool for managing the business on an ongoing basis. The plan provides a road map of how to achieve the business's goals and helps communicate this information to employees.
• Becomes a tool for promoting the business to those outside, especially when seeking financing. All lenders will expect to see a well-prepared, thoroughly researched business plan as part of a financing proposal.

WHO SHOULD WRITE YOUR BUSINESS PLAN?

You should write your own business plan. It should be a personal expression of your overall plans, presented in a polished, professional format. In a clear and concise way, you must be able to communicate your understanding of what you must do, as well as describe the key success factors and the potential risks.
Depending on the nature and complexity of the business, a business plan may take several weeks to several months to complete. It may be helpful to have the plan reviewed by a consultant to make sure all areas have been covered.

WHAT DOES A BUSINESS PLAN LOOK LIKE?

A business plan should be comprehensive, but also brief. You should discuss important things once, in appropriate sections with clear headings. The ideal length is 10 to 20 pages (although some can be 30 pages and more). Although every business plan is unique, all plans should have six components:

Letter of transmittal-
The letter introduces the business plan, explains its purpose, gives the title of the plan or the name of the business, and describes the major features of interest.

Title page-
The title page provides the title of the plan, the name, address and phone number for the business and yourself, and the date the plan was finalized.

Table of contents-
The table of contents is a list of the major headings and subheadings in the plan. It also provides a quick overview of the document.

Executive summary
The executive summary may be the most crucial part of a business plan. In one to two pages, it highlights the most significant points of the entire plan. In many cases, a reader will decide whether or not to read on, based solely on the executive summary. Also, a one-page fact sheet may immediately follow the executive summary. It contains basic information such as type of business and industry, financing required, and payback details.

Body
The body is the longest component the 'meat' of the plan. It presents detailed information about all aspects of the business. More details in next section.

Appendices
The appendices contain material that supports the plan's contents. Examples include product descriptions or photographs, lists of prospective customers, names of suppliers, floor plans and resumes of the management team.

THE BODY OF THE BUSINESS PLAN

The main body of all business plans should discuss five major areas: the business and industry; the product/service and marketing strategy; operating requirements and people needed to manage the business; an overall schedule to launch the business; and finances. The remainder of this factsheet discusses the key topics in each area. For more information, refer to some of the many books on the subject.

BUSINESS AND INDUSTRY

• Describe the business -- its background (legal status, date of formation, founders), current status (market opportunity) and future plans (goals). 
• Describe the industry its current status, major players and trends.

PRODUCT/SERVICE AND MARKETING

Product/service
Describe the product or service you plan to develop and sell, and its strengths and weaknesses. Discuss patents, trademarks or related licensing issues. Describe any technologies required in production, research and development plans, the current status of the product/service and potential market opportunity.

Market analysis
Demonstrate that you have done your homework by thoroughly researching the market for your product/service. Back up your analysis with data collected through market studies, statistics, trade information, survey, and interviews. Based on the information gathered, discuss your target market, its size and trends, the competition and the estimated sales and market share.

Marketing strategy
Describe how you will achieve the estimated sales and market share through a marketing strategy. Describe your plans for pricing, promoting, advertising and distribution. For more information, see the factsheet 'Marketing'.

MANAGEMENT AND OPERATIONS

Management
Many readers of business plans, especially investors, consider the people behind a business the most crucial factor in determining success. State your management team's qualifications, responsibilities, and compensation (salaries). Also include information about other people such as a board of directors.

Operations
Describe your operations plan -- how you aim to produce the product/service for the customer. Include the location and requirements for space, facilities, equipment, and labour. Manufacturers should describe the production process and costs as well as issues such as quality and inventory control.

SCHEDULE

Present an overall schedule for launching the business. Summarize the goals achieved and those yet to be achieved. Describe who will be involved and how the work will be done. Set milestones and estimated completion dates. Be upfront about risks and potential problems, and develop contingency plans. Demonstrate your ability to think things through and to set a realistic, workable schedule.

FINANCES

The financial section of your business plan enables investors to evaluate the opportunity you are presenting. It should cover three areas:

• The type of funding you are requesting (debt or equity), the amount you are seeking, how you will use the funds (such as to buy property or equipment, or for working capital), how you will repay and the proposed terms.
• The current financial status of the business, the level of investment already made and where the funds came from, and the effect the additional funding will have on the business in terms of ownership, growth and profitability.
• The financial projections for the company based on statements of projected net income (profit/loss), cash flow, balance sheet and a breakeven analysis. For more information, see the 'Financing Your Business'. 

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

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