Aidan O'Byrne, OBK Accountants. Published in "The Forum", 26 September 2013
Believe it or not, the most beneficial part of a Business Plan is not the document itself but rather the process undertaken in producing the plan as it acts as effectively an internal checklist (or due diligence) on your business. This holds true whether you are a start up or a well established profitable business.
An effective Business Plan is essential whether you are attempting to raise finance though banking institutions, grants and assistance programmes, micro finance or private investment, they all look for effectively the same thing – Who you are, what you do, how you do it and what differentiates you from the other guy !
In setting out a Business Plan you must guide and educate the reader rather than bamboozle them with volumes of data and jargon. At the end of reading your Business Plan the recipient should be able to succinctly describe what are about, what you are looking to do and how you are going to get there.
There are no set formats for Business Plans but most effective plans have the following categories :
Remember, Business Plans by their very nature begin to become obsolete once you start implementing them and so you should keep returning to the plan checking how you are performing against all the targets that were set.
This would be a cover note identifying the enterprise and the purpose of the production of the Business Plan e.g. to raise Finance from Bank “X”. It would set out the period that the Business Plan will cover and this introduction is the element that can be adjusted for different recipients, you don’t want to be changing vast amounts of your Plan every time you send it to a different party
Table of Contents
Not as blatantly obvious as it may seem, a good table of contents in sufficient detail will enable the reader tab through to a relevant section. Remember although in a small business one person may have produced it all in the large entity reviewing the plan different people may be evaluating differing segments.
Sales & Marketing
Sales & Marketing forms the most critical element of the Business Plan for start up companies. It is critical that you outline what products/services you are going to sell and how you will go about achieving those sales. There should be a separate section for each of your expected income streams and a clear description of how you are going to target the various markets, in particular what you propose doing that is different from your competition or if a brand new product/service how you are going to educate the customer into buying.
Marketing is the activities that cause sales to occur and you need to set out what the plans are, these would include advertising plans, social media strategy, trade events. Each category should be separately identified and costs attached and also what benefits you expect to occur.
The Sales plan should be how you execute the Marketing strategies, what are your channels to market (are you selling direct or through an agent/intermediary) and how you will price the products/services and how these will differ from your competitors. In this area you should set out any seasonality aspects to your sales advising the reviewer of the Plan that income streams may not be even throughout the year.
Operations & Distribution
The Operations section of the Plan should, where you are manufacturing products, outline your processes, the machinery required, the capacity of the machinery and how that ties back into your sales and marketing plans.
If your Business Plan is being written to raise finance for acquiring new machinery/processes then you should clearly set out the full cost of the new activities, including acquisition cost, installation, training and additional stocks required. This section should also deal with the protection of your Quality and Standards
The Distribution section should outline how you get your products to market, how you warehouse them and how you will deal with any significant levels of growth that may occur as a result of achieving additional finance through the Business Plan. There is no point showing sales of 100,000 units and then only showing Distribution capability of 50,000 units.
The Business Plan should show that the company has the necessary skills to deliver on it. It should outline the key individuals responsible for delivering the business and their relevant experience and qualifications. Where a gap has been identified in the skill set of the business, acknowledge this and outline how the business intends to fill the gap either by hiring someone or buying in the necessary expertise.
Whether we like it or not most of the reviewers of Business Plans have a strong financial background and some will just jump to the financials immediately. For a start up business the minimum that a finance plan should include is
It is essentials that the finance sector talks to the other elements of the plan, there is nothing worse than reviewing a plan where there is no clear connectivity between what was said in the Sales & Marketing plan and the outcomes accruing in the Finance plan.
In conclusion, a Business Plan is a roadmap for your organisation, it allows you to detail each area and the critical elements that are in each part. It must remain “live” and not be left to gather dust on the bookshelf.
OBK Accountants are a newly formed Financial Services practice based in Ashbourne providing Accounting, Taxation, Consultancy and Insolvency advice. Unlike most practices its founders have spent most of their careers working at senior management levels in industry and so have a more practical approach to solving your business problems. Contact – Aidan O’Byrne (firstname.lastname@example.org) www.obk.ie
Date Added: 13 Jan 2014