The 7-Step Business Plan for Entrepreneurs
Your business plan is the ultimate tool for steering your business towards success. Without a well-prepared business plan, it’s easy to lose direction and focus – resulting in huge negative business consequences and even business failure.
Whether you require a business plan for internal use or for attracting investment – getting it right will enable your business to reap the rewards and achieve its full potential. Most financial organisations expect a well thought out and coherent business plan as part of any application for funding, grants or investment. Your management accountant will work with you to produce a business plan that boosts your efficiency and maps your way to business success.
7 steps to preparing your business plan
Step 1: Executive SummaryThe executive summary should be enticing, informative and to the point. It needs to gain the readers interest in your business, inform them of what you do and convince them that your business (or idea) is exciting, considered and worth investing in.
In essence, the executive summary introduces yourself and your business to the reader. It should summarise your business plan including important factors such as your product/service, your market, your management and your people. It should also highlight your financial projections and any financial requirements you may have.
The importance of the executive summary is enormous. It’s a good idea to write this section last – you can then simply summarise what you already have in your plan.
Step 2: Business DescriptionThis section gives you the opportunity to inform the reader of what your business is all about. It should give the reader greater detail of the information provided in your executive summary.
Explain the background and structure of your business as well as the industry in which you operate. Clearly state your aims and objectives as well as getting across the factors that make you stand out from your competition.
Step 3: Market AnalysisHere is your opportunity to show you understand the market you will (or currently do) operate in.
Showcase how you will position your business within this market and discuss any important trends or market developments.
Step 4: Competitive AnalysisThis part of your business plan discusses your competition. Don’t be afraid to talk about the positive aspects of your competitors as well as the negative. Showing that you understand your competitors and how you will compete with them is vital in justifying how you will achieve your aims and objectives and be profitable.
Step 5: Sales and MarketingThis is the place to shout about how many sales you will make and how much profit you will achieve. If you have more than one product or service – show how each contributes towards your profit. As well as this, discuss the ways in which you will sell your product or service and why this is suitable to your customer.
In this section you also need to detail how you will attract customers and promote your business. It is important to show that you understand your target market and the methods which will prove most effective in attracting these.
Step 6: Operations and PeopleExplain the general operations of your business such as details of facilities, locations/sites and key suppliers. Ensure the reader understands your productivity levels – be realistic!
In this section you should also detail the role of employees in your business. Show how they add value and how they will help you achieve your business aims and objectives.
Step 7: Financial ForecastsThis is where you justify all the claims you have made so far with numbers! Key forecasts to include consist of a sales forecast, a cash flow forecast and a profit and loss forecast.
This is not just a figures section. You need to discuss each forecast to prove your understanding behind the numbers. Moreover, discuss any funding requirements clearly showing how you will pay this back and what you will use it for.
This section is one of the most daunting to entrepreneurs – your management accountant will play a pivotal role in completing this successfully.
Management accountants thrive on relating accountancy, finance and management in order to enhance their client’s accomplishments. The use of a management accountant in preparing your business plan will likely prove the difference between success and failure.