Plan Your Way To A Successful Business

Key takeaways:

• When do you need a business plan
• Segmenting your business plan
• Tips when writing

Many SME owners are asked about a business plan when they are approached by a potential investor, or apply for funding, or apply to a government scheme or grant project. While business plans are certainly a useful summary for external parties, you should have a business plan from the very start of your business. That way you can plan the growth journey of your business and anticipate ahead of time when you need to expand to new markets, explore strategic partnerships, or apply for funding.

The business plan format

Having a business plan is important to attract investors, establish business milestones, determine financial needs, and uncover new opportunities, among others. These are the common segments in a traditional business plan, as per the U.S. Small Business Administration:

1. Executive summary: A single sentence describing your company and its unique selling proposition (USP). Your vision and mission, product/service, company’s leadership team, and total headcount and outlets or market presence.
2. Company description: Go into further detail about your company, target market, products, and what puts your business above its industry peers.
3. Market analysis: An overview of how your industry is doing and you plan to reach or expand your target market.
4. Management structure: Explain shareholding structure and management of the company, and give detailed resumes of each director/partner/ C-suite member and what they bring to the company.
5. Products/ Services: In-depth detail on your products/services, and pipeline of future products or intellectual property, which would encourage recurring income/customers.
6. Marketing strategy: Tell people how you are marketing your company now, whether it works, and how you are planning to extend your marketing strategy to drive more sales and bring in more revenue.
7. Financial projections: If you are asking for money from investors or lenders, you can add a funding ask in this section. Justify your funding request with 5-year projections of your cash flows, with expected revenue and profit figures that can adequately pay down your debt in time. Since you will have the clearest view of your first year, you can even break down your 1st year projections by quarter or even by month, for better clarity.

Tips when writing a business plan

Harvard Business Review has several tips for those looking to write a winning business plan. First when you explain the Market Analysis, emphasise the market over the specialty of your product. Highlight a large untapped market, an interested consumer base, and make sure to document any claims you make. For instance, don’t claim you can reach 1% of a market unless you can document who exactly the target customers in this 1% are: the size of their business, and which specific products or services will be used to reach them.

The next tip is just common sense: address your investors’ needs. If your business plan is to support a funding ask, you need to tailor it to who you are presenting to in the moment: a large corporation, a traditional bank, a private equity investor, a venture capitalist, a small family office, or a potential business partner?

Many business owners write a business plan from their point of view, being fully-invested in their business for the long-term. Not all investors share that view: venture capital investors often have exit horizons of 3-7 years, while large corporations may want to acquire your SME and absorb it into the parent company if it is successful. Thus, it is important to ensure your 5-year financial projections are sound and not overinflated, a red flag for many investors.

Get a second (and third) opinion

If it's your first time at the business plan rodeo and you are still unsure how it will play out with your audience, it never hurts to get a second (and third) set of eyes on it. It’s a rare entrepreneur who can view his/her own business objectively and without rose-tinted glasses.

Your business plan is very likely to change and adapt to situations and challenges that arise unprecedentedly. Thus, it is not a strict rulebook for your business’ future per se, but an evolving plan that continues to be updated in response to both internal and external changes to business conditions.

If you are a business customer with Alliance Bank, you have access to over 150 partners and third party service providers within the Alliance Digital SME BizSmart ® Solution marketplace. Here, you can find offers and discounts exclusive to Alliance Bank customers from business advisory experts such as Cheng & Co and K Konsult Group, that can help you tailor your business plan to better speak to your target investor’s concerns.