Great tips for writing a business plan
Mired in Marketing Matters
Understanding your target market has value only if you use the knowledge to determine how to reach them to sell your products or services. Potential investors will want to know how you plan to do this, and an explanation of your marketing strategy is a comprehensive section of any business plan. Work with the well-known of the marketing mix: product, price, place and promotion.
Product or Service
Provide a description of the features of your product. Explain what the benefits are to the customer of using your product, and how you plan to position your offering in the customer’s mind. Discuss the name of your company, product or service and explain why you chose the name and what image you intend your brand to convey. Present your company logo and other design elements, including your packaging designs and ideas.
This sounds simple, but in the days of online ordering it may not go without saying. Explain how and where you are planning to sell your products, including details of the physical location and its benefit in terms of marketing. Discuss whether your products need to be distributed or delivered, and how you intend to deal with this logistical aspect of business. Clarify whether your location plays a role in your branding; for example, if you plan to sell online only, does your product or company name convey all the benefits of online sales, such as environmental friendliness, lower cost etc?
Explain how you determine the price of your products. Competitive pricing strategies are based on what the competition charges for similar products; introductory or market penetration pricing are usually lower than ideal prices but are for a short time only, to establish the product on the market. How do your prices relate to your costs do they cover cost of goods sold (COGS) only, or do they cover your overheads or fixed costs as well?
It’s vital to explain clearly in your business plan how you intend to promote your company or product on the market. Are you planning to hold a launch event, and if so, how will you cover the costs? Where will you hold the event, who will you invite and how will you make sure the people attend? Does the business have a website and who manages it? Have you contacted the local press to try and get media coverage for your launch event, and have you produced any marketing materials? Include sales strategies, such as whether or not you plan to employ sales agents and how they will operate.
This section will give the reader of your business plan a mental image of how and where you plan to promote the company or product, and what format the promotions will take.
Enter the Executive Summary
Once all the components of the business plan have been compiled, it’s time to collate them into a comprehensive document with a table of contents and a cover page. But first, you need an executive summary. This is the single most critical aspect of any business plan; it’s a one-page document should provide a brief overview of the entire plan and be compelling enough to persuade the reader to spend the time necessary to read the plan in detail.
Purpose of the Plan
Your executive summary should state right upfront what the purpose of the business plan is. Potential investors don’t want to be kept guessing, so clarify in the first paragraph of the summary whether the plan is a guideline for operations, a prospectus for financing, an annual review or a new, long-term strategy.
The structure of the executive summary should follow a fairly standard format:
- It should be no more than 10 percent of the length of the business plan, although a single page is preferable
- The summary should consist of several short paragraphs, each on a different aspect of the plan
- Your summary should follow the same sequence as the main business plan
- It should only include information and materials that are covered in the plan not introduce anything new.
- The summary should end with a recommendation, rationale for the suggested course of action and justification.
Use business-style language. Limit your sentences to two lines or less. Separate different aspects of the sentence with commas, and if you feel the need to use a second comma rather begin a new sentence. Minimize the use of lists; for example, if you have more than three points to mention, create a bulleted or numbered list to make it easy to read. Remember, your reader will skim the executive summary with his or her eyes and make a decision whether to read further based on that.
End the executive summary with a conclusion that neatly encapsulates the main point of the business plan and calls the reader to action. For example, if you are seeking investors then your conclusion could read: Based on the information contained in this business plan, investment in Company X will provide substantial returns by year XXXX. Investors are requested to declare their interest by [DATE] by notifying the author of the plan.
Create a table of contents that reflects the order of the various sections in the business plan, and compile it into a single report for presentation to your potential investors.