For any startup company there is one business tool that is often crucial to its success; the business plan. This document is a blueprint and road map for the structure, strategy, processes and growth of the business.

Researched, written and formatted correctly, the business plan can help ensure the success of any business by helping you to:

• Stick to your plan
• Outline your business model
• Identify future cash flow problems
• Secure funding

Another value of creating a business plan lies in the process of researching and analyzing your business in a systematic way. This act of planning helps you to think things through thoroughly, as well as studying and researching related facts and figures about your business. This process will help you assess ideas critically. It may take time now, but will help you avoid costly mistakes later.

Business plans are used to:

• Secure venture capital
• Assist public offerings
• Help coordinate a corporation’s operational plans
• Help raise funding
• Coordinate a Total Quality Management (TQM) strategy
• Coordinate Management by Objectives (MBO) strategies
• Help a company’s strategic planning

When you present your business plan to investors or bankers you will need to pay particular attention to your writing style, as you will be judged by the quality and appearance of your work as well as by your ideas and, most of all, whether the figures add up.

There are several different business plan formats that suit different purposes and should be formatted to suit the reader and the context of its presentation. It’s not uncommon for businesses, especially start-ups, to have three or four formats for the same business plan:

• An “elevator pitch” is a three-minute summary of a business plan’s executive summary. This is often used to whet the appetite of a potential investor in the hope that they will be interested enough to read the full plan.

• A Printed Presentation for External Stakeholders - a comprehensively-detailed, well-written, and correctly formatted plan targeted at external stakeholders.

• An Internal Operational Plan - a detailed document describing the planning strategies that may be required by management but may not be of interest to external stakeholders. Consequently, such plans have a somewhat higher degree of candor and informality than the version targeted at external stakeholders.

• Slide Show/Oral Presentation - a slide show and oral narrative that is meant to trigger discussion and interest potential investors to read the written plan. The content of the presentation is usually limited to the executive summary and a few key graphs showing financial trends and key decision making benchmarks. A demonstration of the product may also be included.

Individual investors often prefer a short, succinct plan that emphasizes the executive summary, whereas banks are mostly concerned about defaults, so a business plan for a bank loan should build a convincing case for your company’s ability to repay the loan.

Venture capitalists are primarily concerned about initial investment, feasibility, and exit strategy/valuation. A business plan for a project requiring equity financing should explain why current resources, as well as future growth opportunities, and sustainable competitive advantage, will lead to a high exit valuation.

Although there are many different ways of presenting business plans, most formats include the sections covered in this chapter. You can remove or swap each section to suit your needs.

Disclosure

A non-disclosure agreement is usually included as standard with any business plan. This is intended to protect a new business’ unique ideas, trade secrets, unpatented products etc. A printed non-disclosure agreement should be signed by the reader of your business plan before they read it.

An externally targeted business plan should list all legal concerns and financial liabilities that might negatively affect investors. Depending on the amount of funds being raised and the audience to whom the plan is presented, failure to do this may have severe legal consequences.

Most business plans are divided into four distinct sections:

1) Description of the business
2) Management
3) Marketing
4) Finances

A common format of a business plan is as follows:

• Executive Summary
• Company Summary
• Products and Services
• Market Analysis
• Website
• Marketing Plan
• Financial Plan

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