How to prepare a winning business plan |
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| Economy - Features | |
| Wednesday, 05 March 2008 | |
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The need to prepare a business plan for the first time often occurs at a crucial point in a company's growth. Whether formulated to attract investors to a new project, to support a company's application for additional finance or to assist management in structuring a management buy-out, most potential investors will require a business plan to support requests for financing. A business plan is also an invaluable tool for management as it provides a key link between ideas and the financial impact they may have. A business plan is often therefore the initial contact between the entrepreneur and potential investor or lender. The content and presentation of your plan will be critical in establishing and holding the interest of potential financiers as they review the many proposals that cross their desks. The standard plan does not exist. It is important, however, that management’s commitment, aspirations and enthusiasm are clearly conveyed. The format is flexible enough to adapt to the unique features of your business. Consequently the outline that follows should be used to provoke an assessment of key business information that should be included, so that a potential investor may make an informed decision on the financing of your company. A plan is a means of formally documenting short, medium and long-term plans developed by management in contents that may range from detailed budget forecasts to future strategic thinking. A potential investor will read your plan. Consequently it must be of sufficient length to adequately cover the subject, but care must be taken to ensure that the plan is concise and not excessively long. It is essential to maintain the interest of the reader. A summary of the plan is crucial. It is a good practice for the plan itself to be preceded by a short executive summary (not more than one page), which summarises the key points of the proposal. The information presented in the plan itself should be easily located, and therefore a table of contents is important. The body of the business plan should be as easy to read as possible. This will assist the reader to isolate the factors key to the financing proposal. It is good practice to include detailed information such as technical specifications, management profiles, market data, in-depth financial and operating analyses in the appendices. Most potential investors will prefer to receive a well-presented, well-conceived business plan rather than a glossily printed booklet. Graphics, charts, photographs and other visual aids should be considered, as these have the advantage of concisely presenting data that otherwise would require detailed narrative in the body of your plan. Having established interest in the executive summary, you should then pay particular attention to those critical elements that are likely to be subject to particular analysis and review. The three most important of these are: company management, product marketing and the financing of the business. A sample business plan outline is listed below:
The appendices should include documentation that supports or further explains the strategies and observations noted elsewhere in the plan. Consideration should be given to including copies of the items listed below if appropriate.
The cover of the plan should be clearly marked ‘confidential’ and the number of copies in circulation limited and closely monitored. Before handing over a copy of the plan, especially if you are intending to give it to potential investors, you are recommended to get them to sign a confidentiality or non-disclosure agreement. A detailed, free downloadable guide to producing a business plan is available free of charge from ContractStore.com. Giles Dixon is managing director of ContractStore.com, a supplier of online commercial contracts. Comments (0)
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