17 Sep Making A New Business Plan? Here Are Few Tips
The important that business planning plays in any business is widely known, however, the guidance on factors which lead to good business plans are not clearly defined.
A business plan is a means of conveying an idea for achieving specific goals such as securing funding from investors etc. Therefore, the plan needs to be prepared keeping in mind the audience and their requirements which will assist in shaping a winning plan.
Points to be taken care of while drafting a business plan
- Financial Projections
One of the main areas that business plan focuses on, is the projected profit or loss or Income Statement. Just because the numbers are projected doesn’t imply that those numbers can be included without proper process or rigor.
The mentioned figures should be defensible, consistent and credible. Obviously, forecasting doesn’t involve exact science and use of proxies can be helpful for ensuring that included figures are consistent and plausible with story mentioned in other parts of business plan.
The figures must reflect cash flow generating ability of company so that business can be operated profitably with satisfactory debt servicing, at the same time.
All costs should be duly recorded in profit and loss projection including the salaries paid to owner managers who are running the company as it is not credible generating a projection that doesn’t reflect business profits adequately.
- Description of Opportunity Viability
A business plan must not only focus on describing an opportunity, but it must also consider about how that opportunity can be explored fully for demonstrating ability of company to render the required results.
Nowadays there has been increase in the business plans which are inaccessible to average readers as they are described in unfamiliar terms and technical jargon.
If the reader is unable in grasping details of prospective customers and targeting details related to that customer, the reader may not find any interest in investing his amount in business.
Therefore, it is of utmost important that plan is able to describe the opportunity in understandable terms like proposed solution, benefits of solution etc so that there is greater transparency to the investors related to the viability and profitability of the plan.
- Estimation of Revenue
The most important term that investors will be looking out in your business plan will be the potential revenue and profits. Though, description of market opportunity will be mentioned in positive terms, the obvious danger is related to the intuitive optimism of the owners and their tendency of exaggerating every opportunity.
Therefore, the figures related to sales, revenue should be justified and based on research and analysis. If you mention the figures which are nothing but related to your intuition then the reader will lose reliability in your business plan, which will surely undermine confidence of prospective investor.
You can hire a reputed business plan consulting firm that can help you in writing your business plan as per the opportunity and research that they will be conducting.
Trust of investors and customers is the key to any successful business activity. Therefore, make sure that you put correct details in your business plan so that a long term relationship with investors can be maintained.