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10 ideas to make your next business plan soar
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A business plan is a critical document for any business.
A lack of a business plan has been listed one of the top three reasons a business fails.
Any creditable book on owning or running a business ownership states its importance.
There are two types of business plan which can be put together.
The first is a business plan for a brand new business with the second for an existing business.
To create the best business plan that you can, consider the following ten tips:
1. Complete all sections
Business plans take a little time to create. Don’t rush the process. Part of its value is making you take thoughts in your head and convert them to valuable and considered ideas.
Remember, write the business plan according to the audience that will read it
2. Focus on cash flow
If the business plan is to support a loan application to a bank, make sure the cash flow projections are solid and make sense. If financial planning is not one of your strengths, consider getting help from a professional so you get it right. Preferably work with someone that you will use on an ongoing basis in the business so they can provide continuous and consistent advice.
3. Include a ‘break-even’ analysis
A bank is in business to make money and will therefore want to see that you understand there will be income and costs. More importantly, the bank will want to know how long it will be before you get to a break-even situation and whether you have the resources to get there, plus what buffer you have if it takes longer than you think.
4. Financials need to be realistic
Make sure that your financial projections are realistic. If the reader of your business plan thinks your financial targets are unrealistic they will question the rest of the business plan, if they decide to take it seriously at all.
5. Tell a story without the hype
This is not a marketing document for somebody to buy your product or service. It’s a document to explain the what, how, when, where, why of both the present and future of the business.
6. Write for the person who knows nothing about the business
A business is a living and breathing entity that essentially has two main components; people and money. The goal is to explain in simple terms to anyone who reads the business plan:
• what the business is about,
• what the business stands for,
• how the thoughtful and proper use of both capital and labour will be successful to the business; and
• what help is required to contribute to that success.
7. Keep the business plan business-like and professional
If the business plan is to support a loan application, most lenders are only really looking to see the direction of the company, whether their capital investment will be used wisely and that the business is something they can believe in.
8. Make sure the details are accurate – don’t exaggerate
A business plan is a place to introduce and explain. Wherever possible, support opinions, thoughts or suppositions with facts and statistics; this is not the place for unrealistic exaggerations.
Reports and information about relevant industries are available and provide readily available data about the direction an industry is going in. Use this data in your reports to give credibility to the business plan.
9. Be concise, clear and simple
This is a business document. The reader is not looking for a novel; they can get that from a bookstore.
10. Be careful with the use of technical jargon
Technical jargon can speak to the sophistication of the business plan but it can quickly alienate a reader who is not familiar with all the terms. Use technical jargon sparingly or provide a simple and clear definition, if it’s important to use.
Make sure that any explanations used are those that are generally accepted; not the writer’s pet project. If in doubt, have someone who isn’t part of the business read the business plan and offer constructive criticism.
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