Whatever the aims for your business might be, there is a good chance that at some stage you will need to draw up a clear plan for its progress. The process of creating a business plan can be hard work but it also serves a variety of important functions, not least that of potentially attracting the finance that small companies so badly need in order to get started.
With that in mind, here are 6 tips for getting it right when it comes to building a great business plan.
1 – Focus on the business
The first thing to have in mind when you come to draft a business plan is that even the most wonderfully written set of documents in the world will not count for much if the actual business in question doesn’t stand up to scrutiny. A good business plan can help sell your company to potential investors or creditors but it is the business and not the plan that they will be most interested in and that will really make the difference.
2 – Be clear about who your target customers are
There are few if any more important elements of a business plan than those that explain precisely who the target customers of your operation will be. What you should be aiming to do is show that you know precisely the kind of people who will be interested in your products and services and how you can reach them. Ideally, your business plan will persuade its reader that you are offering your target audiences something new that they cannot already find elsewhere.
3 – Understand your market
Having an in-depth knowledge and understanding of your market is vital to success in most cases where new businesses are being created. If you’ve done your research and you feel confident that your company can succeed then you need to explain why in as convincing and compelling a manner as possible in your business plan.
4 – Understand your audience
The focus of your business plan should be guided to some extent by who you hope to see taking an interest in it. A creditor will generally want to be convinced of your capacity to turn your ideas into sustainable revenues, whereas an equity investor will want to see potential for relatively quick and sizable returns if at all possible.
5 – Pinpoint your competition
Bringing something new to the table is generally very important and desirable for new companies but, however fresh your ideas might be, it is likely if not inevitable that your business will have a number of key competitors. Details of who they are and what they offer can help give your business plan a worthwhile and appreciated sense of perspective.
6 – Show knowledge of potential risks
There are always downside risks with companies of any size and in any field. To pretend otherwise implies a certain amount of naivety in the context of a business plan and so these risks should be referred to, though not, of course, overstated or dwelt upon too extensively.
Putting together a good business plan can be a painstaking process but with the right focus you should find it all worthwhile, particularly if it makes the difference in your pursuit of funding.
Conrad Ford is the founder of Funding Options, which provides a range of online tools to help firms and their trusted advisers to manage funding and cash flow.