Tips on how to write a business plan

Competitive AnalysisThe purpose of the competitive analysis is to determine the strengths and weaknesses of the competitors within your market, strategies that will provide you with a distinct advantage, the barriers that can be developed in order to prevent competition from entering your market, and any weaknesses that can be exploited within the product development cycle. When describing the industry, discuss the present outlook as well as future possibilities. But make your financial projections more conservative—for example, a 10 percent market share is much more credible. Even if you’ve developed such a universally needed item as soap, you need to identify a smaller, more targeted customer group first, such as children under eight who might like bubblegum scented bubble bath, or soap made for mechanics.

Consider adding an advisory board of people skilled in your field, and include their resumes. A clear and compelling business plan provides you with a guide for building a successful enterprise focused on achieving your personal and financial goals. The starting point for any business plan should be the perspective of the audience. It can also help persuade others, including banks, to invest in what you are creating. Design & Development PlanThe purpose of the design and development plan section is to provide investors with a description of the product's design, chart its development within the context of production, marketing and the company itself, and create a development budget that will enable the company to reach its goals. You need to analyze secondary research collected by outside observers, as well as getting primary research that you collect yourself, with your own methods and observations. For example, a potential investor will seek clear explanations detailing the proposed return on their investment and time frames for getting their money back. I’ve had experience both developing business plans and reviewing them for potential investments. The writer should tailor the plan for different audiences, as they will each have very specific requirements.

The entrepreneur should undertake market research and ensure that the plan includes reference to the market size, its predicted growth path and how they will gain access to this market. Being overly optimistic with time and resources is a common error entrepreneurs make. The simple act of writing down your idea and outlining how the business will operate can be helpful to ensure that you communicate your vision and that everyone is on the same page. A plan for an Internet café will consider the local population, Internet penetration rates, predictions about whether it is likely to grow or decline, etc. Consider which segment of the local (and/or international) population will be seeking to use your products or services.

If you say your management team is fully qualified to make the business a success, be sure staff resumes demonstrate the experience needed. You’ll probably want several versions of your business plan—one for bankers or venture capitalists, one for individual investors, one for companies that may want to do a joint venture with you rather than fund you, etc. Operations & Management PlanThe operations and management plan is designed to describe just how the business functions on a continuing basis.

The recent Dragons’ Den series on BBC 2 reiterated the importance prospective investors place on knowledge of the market and the need for entrepreneurs to thoroughly research their market. If you say your product will take the market by storm, you have to support this statement with facts. You should also provide information on all the various markets within the industry, including any new products or developments that will benefit or adversely affect your business. A business plan is crucial to get support for your vision because it shows that you have thought through an idea clearly and aren’t just winging it. In this edited excerpt, guest contributor Kaye Vivian, an expert in writing business plans, offers advice on how you can improve your business plan content and presentation. However, this skill is a vital requirement for any entrepreneur or business seeking to increase their chances of survival. Executive SummaryWithin the overall outline of the business plan, the executive summary will follow the title page. A market analysis forces the entrepreneur to become familiar with all aspects of the market so that the target market can be defined and the company can be positioned in order to garner its share of sales.

Is your product or service attractive to a particular ethnic or economic population? For example, I once wrote an entire business plan with a business partner on paper towels. Although an idea is what often gets investors interested, a business plan is definitely needed to get financial support from them. In other words, your business plan doesn’t have to be some manicured document in order to make it successful. SubscribeLast week, I discussed the components of a strong business plan and why entrepreneurs should create them, regardless of their venture. This needs to be more than mere guesswork and involves doing accurate and intelligent research.