Writing A Business Plan
Writing A Business Plan will provide information of your proposed venture to lenders, investors, and suppliers to demonstrate how you plan to use their money, and to establish a basis for credibility of your project.
A business plan is a recognized management tool used by successful and/or prospective businesses of all sizes to document business objectives and to propose how these objectives will be attained within a specific period of time. It is a written document which describes who you are, what you plan to achieve, where your business will be located, when you expect to get under way, and how you will overcome the risks involved and provide the returns anticipated.
The business plan should be prepared by those persons who will be implementing it.
Outside assistance from consultants, accountants, bookkeepers, and experienced business people can definitely help, but you must draft the initial plan. After all, you are the one that is going to run the business once it is open.
Think through each element of your business plan thoroughly so you have a good understanding of the overall picture and all of the details.
Present your plan to others for constructive criticism and advice, and try to profit from their experience. Modify your plan if necessary.
Writing A Business Plan - First Draft
You will find that your final copy of your business plan may differ from the original draft, as you will be updating, revising and refining it as you go. It is important that you examine all the relevant factors now. You won't appreciate any surprises after your business has opened its doors.
If you have never drawn up a business plan before, you may be curious as to what the benefits are for you. First and most important, your plan gives you a guide to follow. Second, it gives your lending agency insight into your business opportunity therefore, positively affects your loan application. Finally, your plan will help you develop as a manager, giving you practice in thinking about competitive conditions, promotional opportunities, sources of finance, etc. Your goal is to put the plan into action.
A well-designed table of contents ensures that you as well as other readers of your business plan don't waste time searching through your plan for the information they are most interested in. For example very few, if any, investors will read your plan from front to back. Instead, they will normally jump around looking for the details they need to make an informed investment decision. Keep this in mind when you create your table of contents, and organize it to make it as easy as possible for readers to find their way around your plan.
We advise that by setting out your executive summary first your readers will start with the summary, and then they can locate specific information that they want to address first.
Your table of contents should list all the major sections within your business plan, and can also be broken down into important or clarifying sub-sections. Be sure to include a page number for each section and subsection.
The table of contents should be completed after the rest of your business plan is finalized. Make sure your table of contents page is organized, clear, neat, and properly numbered. Mistakes, sloppiness, or misspellings in the table of contents give your reader the impression that you are unorganized and careless.
Your table of contents must be clean, well organized, and free of mistakes. A sloppy table of contents, or even worse, no table of contents at all may destroy any hopes you have of getting anyone to review your plan.
How To Write A Business Plan
Small Business Secrets Course
Writing A Business Plan - Mistakes To Avoid
- Important sections and / or subsections missing
- Page numbers do not match up correctly with the content of the plan
- The table of contents on more than one page
- The table of contents provides too much detail and is cluttered
- The text layout is not uniformly aligned and looks sloppy
- It appears that little or no thought went into its design and creation
To avoid a poor initial impression, double check the layout and pagination before you send out your business plan.
Writing A Business Plan - Table Of Contents
Every business plan is different, and therefore every table of contents should be customized for that particular plan. Use only those headings from this list that make sense for your plan, and that will help your readers get the most from your table of contents.
Business History and Description
Product / Service Description
Description of Product / Service
Advantages of Product/Service
Product Development Activities
Industry Trends and Growth Patterns
Target Market Demographics (Customer Description)
Target Market Trends and Growth Patterns
Market Size and Potential
Pricing Strategy and Positioning
Public Relations and Promotions
Comparison of Strengths and Weaknesses
Competitive Market Niche
Market Share Analysis
Barriers to Entry
Sales Process Description
Service and Warranty Policies
Property Ownership / Lease Terms
Manufacturing Process and Operations
Quality Control Measures
Administrative Procedures and Controls
Staffing and Training
Management Control Systems
Board of Directors
Board of Advisors
3 Year Historical Financials (if applicable)
3 Year Projected Financial Statements
Current Ownership Summary
Funding Request / Terms of Investment
Sources and Uses of Funds
Major Obstacles to Success
Product Samples / Pictures
Business Location Site Information
Other Important Data
Many new business owners lack the ability to generate a well-written business plan. Not having this ability puts these businesses at a competitive disadvantage. Business writing has become more than a nice thing to have -–it has become a business necessity.
The following are some key points when examining your company’s business writing skills:
- Everything that is written by your business is a reflection of your business. Misspellings, poor grammar, bad syntax, and weak logic project a definite image. In my view it is often better to not write anything than to write it poorly.
- How the written word appears effects the impact. Don’t write an important business letter on a cheap word processor, printed on a cheap laser jet with cheap paper and mailed with a cheap envelope. Your message may have difficulty coming through the cheapness.
- Review all your written materials to see if they can be improved. Be your own editor first and then have someone else look at it. Take criticism constructively.
- Use spell and grammar checks. I often look at a rough draft a number of times for errors before spell checking. I am amazed at how many errors get through.
- Audit your business’ writing skills. Often the office manager can write better than owners or upper management. Find out where you are weak and see if training or courses might help.
- Make sure all employees know the importance of clear, concise writing. Almost all businesses have some form of internal and external written communication. Employees do not necessarily have to be good writers or even be great spellers but they do have to be able to communicate ideas.
- Hire for writing skills. I will often have an applicant write several paragraphs at the end of an interview. The question can be something like ‘summarize your strengths and how you feel they can help our company.’ What they write about is not as important as how they write. Can they spell, write complete sentences, know correct grammar, think logically, etc. For managers this becomes more critical since writing is an essential part of management.
- Read. Reading can improve your writing. The more you read the more you understand what good writing is.
- Practice. Get in the habit of writing letters and E-mail.
- Find a mentor or ‘fellow student’ that does not mind editing your writing.
- Work on your weaknesses. Make certain that the meaning you are intending is the meaning expressed.
- Try to write something well even if it is short. This will reinforce the positive nature of your writing. Some business people get so frustrated by the negatives they give up trying to write.
- Use writing as a tool to help you learn and understand new things. If you write about something new you can ‘own’ it. Writing also helps you organize your thoughts. For this reason writing is being used in various therapies.
- Examine your competitor’s writings. The first thing I do on a ‘spy’ mission is gather printed material. They not only contain data and information but strategy as well. Printed materials are a good indication of a business’ sophistication.
- Avoid interruptions. Cut off the phone and shut the door when you write. Good writing requires focus and concentration.
Look in the mirror when you come up with excuses for poor writing. Excuses such as lack of formal education do not matter in the marketplace. Some with little or no education have great writing skills while many university graduates cannot write a simple sentence correctly.
In today’s fast-paced business environment communication is not optional. Writing is still one of our best methods of communication.
Writing Your Business Plan
When it comes to writing a business plan, there is nothing quite as valuable as having a guide to go by, and having a quality business plan sample at hand will make the task of writing a new business plan a lot easier.
While the exact needs of every business will differ, there are a number of elements that must be part of any type of business plan, and having a business plan sample at hand can help any business owner include these essential elements.
Some of the most important elements of any business plan sample will be such things as a current a pro forma balance sheet, a current income statement and an up to date analysis of cash flow.
It is important to look for a business plan sample that includes all of these required elements, and just as important to tailor those elements to the needs of your own business.
When seeking out a business plan sample it is important to plan carefully and to look at several different business plan samples before deciding on a single one to use.
There are many different kinds of business plan examples available, both in books and magazines tailored to the business world and of course on the internet. It is a good idea to look around carefully until you find the business plan sample that best meets your needs.
Using a business plan sample from the same or a similar industry is a good idea, as is seeking out a business plan sample that matches your own style and needs.
After you have your business plan sample in hand, it is important to use that business plan sample as a guideline and a starting point.
While having a business plan sample available will make the job of writing a quality business plan a lot easier, it will not replace the hard work necessary in the formation of a business plan.
It is best to think of the business plan sample as a template and a guideline, and to use it to create a business plan that is uniquely suited to your own special area of expertise.
Writing A Business Plan Effectively
Effective business writing skills can help you win that million dollar contract, earn a promotion, resolve a dispute, or generate a significant increase in new business leads. Poor business writing, on the other hand, can never be undone; it can cause you to lose business to your competition and even cost you your job. Here are some easy ways you can improve your business writing skills:
- Before you write a word of copy, make sure you know who your target audience is and what specific result you'd like to achieve. If it's an important business communication, take five minutes to visualize yourself in the shoes of the recipient and imagine what this person's world is like. What does their typical day look like? What are their unique needs, goals, and challenges? What problem is keeping them up at night? The more thought and research you invest in understanding your target audience and how you can help them, the more powerful and effective your business writing communications will become.
- Avoid using your company acronyms and buzzwords. While they might seem cute and clever to you, it's very annoying to a busy executive who has a pile of documents and proposals to read. Avoid using academic language like 'ergo,' 'henceforth,' or 'so to speak,' and as a general rule of thumb avoid use of technical jargon. Simplify big words: write use instead of utilize, send out instead of disseminate, fair instead of equitable, etc.
- Use a strong, active voice instead of the impersonal, passive voice. "The meeting agenda could be discussed further" is passive. "Let's discuss the meeting agenda" is active. Express confidence and decisiveness in your business communications. Instead of writing, "I intend to write a report on sales performance measures," which comes across as weak and indecisive, write: "I'm currently writing a report on sales performance measures for completion on or before end of the second quarter."
- Write in a conversational tone instead of alienating your readers by being too formal and bureaucratic – unless you're writing to a bureaucrat or someone who prefers formality. Know your audience!
- Even if you are writing a marketing communications piece that will be read by several thousand potential readers, make your writing as inviting and personal as possible. You can accomplish this feat by writing to one specific person who you can visualize as an ideal customer. Pretend you are sitting down with this person in a bar and having a casual conversation. Write your piece with this one person in mind and you will positively engage thousands of readers who will feel that you are writing directly to them!
- Replace hyperbole with solid facts and reputable testimonials. Phrases like, "We're #1," "We're the leader in our field," or "We provide the best service," aren't going to get you anywhere. Instead, use a fact such as stating that the President of a leading association ranked your company with the highest quality score out of 500 certified companies.
- Convert product features into benefits. Mentioning that you provide automated billing or an automatic domain name renewal service does not engage your customer emotionally. Here's an example of benefit oriented copy: "Our automatic domain name renewal service will provide you with the added security and comfort of knowing that your domain names will never be hijacked by your competitors while freeing up your administrative time to focus on growing your business."
- Don't rely on editing all your important business documents from your computer desktop. Print out your document and read it out loud. If you encounter any awkwardness in speech it means you need to re–write your piece to make it more conversational and flow better.By reading your document out loud, you will also be able to spot typos and errors that your computer spelling and grammar check program might not have detected. As an example, you might have written 'echo friendly' when you really meant 'eco friendly.'
- In writing a business letter or business proposal, it is vitally important to write from your customer's perspective and what will interest them. Start off by writing about how great your customer's company is and what specific attributes you like about the company instead of bragging about how great your company is. Too much use of "I," "me," or "our company" is a sure sign of ego getting in the way of business. Make sure to generously use "You" and "Your" in your business copy if you want to make more sales.
- Business writing is very different from writing poetry or literature. Don't meander or get carried away with flowery language. Write the most important point you want to make in the first sentence. If you are writing a sales letter, you can significantly increase sales by simply including a powerful P.S. at the end of the letter that summarizes the main point in a fresh way, creates a sense of urgency, or adds further credibility. Here's a powerful example: "P.S. I've been invited to speak at your association's annual conference this coming Friday and hope to see you there."
- Be clear, concise, and to the point. Don't assume readers will know what to do. Guide them by including a specific call to action: "click on the link to get your special report" or "call me to set up a no–cost 15 minute consultation."
- Use word pictures to get your point across. Can you imagine the thrill and excitement of driving a rocket–fast, cobalt blue Porsche 911 Turbo as it whisks you to your desired destination? A well–written article or report can be like that Porsche and generate a ton of new business in half the time with more fun! After all, what's more exciting, cold–calling prospects or having them call you? (If writing is a challenge, consider hiring a professional).
Writing A Business Plan - Where To Start
When you write your own business materials, it's not always easy to get pen to paper, or fingers to keyboard. Here are some tips to keep the creative juices flowing-or to get them started.
First of all, are you clear what your purpose is? Before you start writing be sure you know what your goal is.
If you get stuck facing a blank screen, try talking your ideas aloud, discussing them with someone, or mapping them on a sheet of paper. Brainstorming maps work well for randomly generating ideas or use the cluster method of linking related ideas in spokes off a central idea.
Nothing is too weird if helps you work: the philosopher Immanuel Kant could only write with a shrivelled apple in his desk drawer (he liked the smell). Some people swear by Baroque music (Handel, Bach, Vivaldi)-for you it might be a bowl of corn nuts. Set up an environment that caters to your writerly needs. If you are at the office, this might involve some compromises.
Much of writing is thinking, and much of thinking is listening (erroneously referred to as "staring into space"). If you are in an environment where you are distracted by noises (or there aren't enough noises) find the right place. This might mean writing a first draft somewhere else and revising at your desk.
If outlines work for you (take heart, they don't for everybody), start your work with a rough outline of the areas you want to cover. You don't have to go through this outline in a linear way. Start where you have your ideas. If you get a random idea that doesn't fit anywhere put it at the bottom of the page in a parking lot area for later reference. Never, never say "I'll remember that" because it just ain't true.
Don't try to sound perfect on your first go through. Just get it down in point form or crummy sentences first. Allow yourself the luxury of messiness. Type ideas as they come out. You may start to see a pattern emerge and be able to loosely group ideas together. Much of what we call "organization" goes on in our head while we are in the act of writing.
If you get stuck in the middle of a sentence looking for the right word, type XXX or ???. You can come back later and fix it, but now is not the time to staunch the flow of ideas.
If you're really stuck, have someone read what you've written and ask you about the unclear parts. You'd be amazed how many times when a writer is asked "what did you mean by..." the writer answers in a perfectly clear sentence which can be used in the written work.
If you're stuck on how to approach the writing, try writing in a different "voice." Type as if you are speaking to a friend. Or fill out details by using a question and answer format. Or start by saying what the reader won't find in this piece of writing (to arrive at what they will find). You can revise and refine later to adjust the style and format.
It's often a good idea to print a hard copy of your first draft and revise it away from the screen. Changing medium like this is a good way to get a fresh look at your writing.
Don't be too hard on yourself. Sometimes what we call writer's block is actually the "processing" stage of the writing process. This is where we wander around doing anything but actually writing-making coffee, vacuuming-but all along there is a subconscious thought process going on which is roughly ordering ideas.
Of course, it's up to you to determine where "processing" crosses the line and becomes outright work avoidance.
Prior to writing your business plan, take time to focus on two primary goals: What you see as the objective and future direction of your business and what you envision as your final business plan.
The goal or future direction of your business. By identifying where you see the business moving in the next one, two, or five years, you can write a plan that adequately reflects your goals. Your personal skills, needs, knowledge, leadership abilities, available resources, level of risk, and the nature of your business factor into the equation when identifying your personal business goals. One of the most important aspects of starting your own business is that it gives you an opportunity to do what you enjoy. If your goal is a two-person business, then that is what you will reflect in your business plan.
Conversely, if your goal is to build a large corporation, and you realistically feel you have the knowledge and experience to do so, then that is what your business plan should indicate. There is no minimum or maximum length for a business plan. The determining factor for length depends on the level of details and the amount of funding you require to achieve such goals.
The goal for writing the business plan. Are you writing the plan to attract funding, as a guide to running the business, or both? While one plan can serve both purposes, you may want to tailor the plan to more closely focus on the financial needs of the business, especially if you are trying to procure funding. You should clearly state how much money is needed, how it will be spent, and when you foresee paying a profit on the investment dollars.
If, however, the plan is for yourself or your team to use as an internal guide, you can place the emphasis more heavily around reaching specific goals and milestones. You would create such a plan with an emphasis on guiding you through the business process. The goals of such a functional plan will be to measure operational progress, test planning assumptions, anticipate capitol requirements, make decisions on adding or eliminating products or services, and evaluate operational procedures.
Therefore, prior to writing a business plan, create a list of your personal goals for the company and then determine the goal of the plan itself.
The business plan has become less popular in the last few years. Part of the problem is its value as a tool is questionable. Ask yourself honestly, when was the last time you reviewed and revised your plan? Most owners and managers might look at their business plan once a year. The topic of business plans usually elicits groans of ‘oh that.’ By default the business plan is dying. Many lending institutions are not requiring a business plan for loans. Yet the business plan can be an effective tool when used properly.
Writing A Business Plan - Important Considerations
The following are some important considerations when looking at your business plan:
- Use software. One of the reasons business plans are so unwieldy is that they are so hard to revise. Using software eliminates this problem. Software is also good in creating a new plan. Software formats include fill in the blanks and question prompts. Look at a number of templates and outlines to determine which categories are appropriate for your business.
- If you are planning to sell outright or create stock make a plan. My experience has been that a business is worth 10-15% more with a well-written business plan. This allows the buyer a good look at your business in a very short period of time.
- Beware of those selling business plans that crank out several a day. How much value can a mass-produced plan bring? A good plan by an outsider may take several weeks and cost $3-5 thousand dollars.
- Do the plan internally or at least be involved with each step. A business plan is worthless if you do not understand it. The business plan is an effective tool only if it is used.
- If you have never written a plan or are a start-up do a marketing audit first. Many plans do not address the most important items first -- these plans are of little value.
- Do the plan in ‘chunks’. I advise my clients to put improvements and processes into a business plan as we work through their business. Often when we are through they have the foundation for a good plan.
- Make your action plan part of your business plan.
- Don’t make your projections unrealistic. Unrealistic projections show your reader you do not know what you are talking about.
- Update your business plan at least twice a year. Plans become useless because they are outdated and meaningless.
- Get outsiders to review your plan for content. An objective opinion may provide real insight.
- Employee input makes for a better business plan.
- Be especially careful on how you write the summary. The summary is usually the part of the business plan that is most read.
A strong Business Plan may not guarantee success; but it could certainly prevent failure!
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