How to write an effective business plan (3/3)

In our last two posts we covered the classic mistakes people make in writing business plans and some characteristics of the most effective plans we have reviewed. Classic mistakes are that the plan is too long, it is blatantly optimistic, it looks like a filled in template, it contains too many broad generalisations, and it is written in language that impairs understanding. Key steps used by writers of effective plans are: being clear who and what the plan is for, convincing themselves about risks before writing the plan, treating the plan as step one of many, and using clear language.

Now we review typical sections that we expect to see in some form in the plans we review:

Plan contents

The bullets below show a typical framework for a plan. This framework is a start point and no more than that. It needs to be cut and changed to tell the story you want to tell in the clearest, most relevant way. With the right mindset and style for the plan, you can adapt the sections below to get your idea across, and generate credibility and interest from your target audience.

Business Plan Template

Executive summary (1 page)

Summary description of the business containing enough for a person to understand it in 5 minutes. One paragraph each on:
– Business background (description of the business)
– Vision and strategy
– Relevant market background and trends
– Revenue and cost expectations (short summary table)
– Key next steps in implementation plan

Business description (1-2 pages)

Background
– Description of the products or services the business will provide, and why they are better or different than what already exists
– Description of the customer groups
– Any other relevant background needed to understand the business
– Any relevant history

Vision
– Description of your vision for the business that will get people excited. Include any tangible targets in terms of sales, customers, product performance, market share, etc.

Strategy
– Summary description of how the business will achieve the vision described above. Include relevant descriptions of how your product or service will developed and marketed, and any other important issues to get right, e.g. technology, sourcing products, etc

Market (1-2 pages)

– Description of the market including estimates of overall size and the opportunity for your product/service
– Description of any market trends that are relevant to demand for your product/service

Competition (1 page)

– Description of direct competitors and alternative products or services customers have to buying your products/services
– Explanation of why your product/service is better or different than the competition

Revenue streams (1 page)

– Description and quantification of all major revenue streams for a three year period, being clear about all assumptions

Costs (1 page)

– Description and quantification of all major costs for a three year period

Implementation plan (1-2 pages)

– Explanation of all major steps required to get business up and running, and performing in the first year. This is best done as a table describing with all major actions with deadlines and responsibilities

Financial projections (1 page)

– 3 year summary profit and loss account
– Description of all major investments

Team background and credentials (1 page)

– One paragraph on each of the team members

So there you have it. At its heart, a great plan will describe a great idea, supported by a great team, but will do so in a brief, clear way, that gets to the point and intrigues the potential backer.

The last plan we wrote was for a start-up sports team and it raised a £40m investment, from the first backer the team approached, within two months. The plan was short and simple with not a SWOT analysis in sight, but it was a great idea and had a great team. The plan was just step one.

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Please email steve@latitude.co.uk for the full pdf.