Whether you’re thinking of starting your first business or you already own an established business, it’s highly likely that, at some stage, you will consider applying for a bank loan to secure additional finance. However, banks now have far more stringent lending criteria than ever before and finance is by no means guaranteed. One of the key factors in determining whether or not your loan application is a successful one, will be your business plan. So how do you write a successful business plan?
As a specialist business transfer solicitor, I have acted for many small and medium sized business owners over the last 20 years, in a wide variety of business sectors, and have had the opportunity to review many business plans. Some are good. Some are not. As with most things in life, you get out what you put in and business plans are no different. Fail to do the required research and analysis and/or to present it in the right way, and you can kiss goodbye to your injection of cash, no matter how good your business proposition.
5 essentials for writing a successful Business Plan
Here are the 5 basic rules for the preparation of your business plan:
- Keep it to the point. Your business plan is a sales tool. It should be easy-to-read, engaging and persuasive. It’s imperative that you conduct thorough market research and financial analysis before writing your business plan. However, the plan itself needs to demonstrate your commitment, ability and level of understanding without going into pages and pages of detail. Use a clear and logical structure (see below) and keep the nitty-gritty facts and figures as supplementary evidence in referenced appendices.
- Write with a Goal. Business plans are written for different purposes. What is your aim, your goal? What do you want the reader to do?
- Use plain English. Your business plan is not the place to show off your fancy technical jargon, GCSE Latin or to use lots of acronyms. It should be easy for whoever reads your plan to understand exactly what your proposal is.
- Get professional help. You could, of course, download one of the many business plan templates available on the internet. However, you only get one chance to make a good impression. It’s important that your business plan reflects your individuality, your energy and what it is that makes your ideas stand out from the crowd. It should also include accurate facts and figures and a professional valuation of the business you intend to buy. So, while it is important that you are the main contributor to the business plan, it makes commercial sense to engage professionals such as accountants, surveyors and business solicitors to ensure your business plan covers everything it needs to and presents an attractive and viable business proposition
- Use a clear and logical structure. Remember your business plan will be read by someone who may not even have met you before, let alone spent the last 6 months living and breathing your business plans with you. Give them the information they need in a clear and logical way, starting with an Executive Summary.
- The Executive Summary is your business plan in a nutshell: it outlines your proposal, clearly stating what you’re asking for and why. Just as an interviewer will make a judgement on a candidate within the first two minutes of an interview, your Executive Summary will influence how a bank feels about the viability of your proposition before they’ve even turned the page. The rest of your business plan should cover the following areas:
- Business Description including the nature of your product/service; a short description of the industry and markets it competes in; and your proposed ownership structure.
- Market and competitors including a definition of your target market; an illustration of important trends and how you plan to position your product/service; details of any existing customers or sales in the pipeline and how your product/service will be promoted and sold; identification of the strengths and weaknesses of your competitors and what you can do to win business from them.
- Design and development including your views as to how the service/product will develop over time
- Operations and management including a summary of the management skills and team skills be required to ensure the business is well run on a day-to-day basis; details of facilities and management systems and procedures; and demonstrating your commitment to the business in terms of your own time and money
- Financial factors stating how much you need to borrow, when and in what form (eg, overdraft or fixed interest loan); giving realistic cash flow and profit and loss forecasts for the next 3 years, showing what the money will be used for and how and when it will be repaid, listing the assumptions on which you’ve based your projections
- Risk factors describing possible weaknesses in your plan, what risks your business may face and how you would manage them.
If you would like to run a business plan past one of our experienced business transfer and financing solicitors, please fill out a contact form on our website and we’ll connect with you to discuss it in confidence.