How to make a good business plan

1. INTRODUCTION

This entire section should fit onto one page for all types of plans.

The Introduction to Plan could cover the following matters.

• Briefly introduce the business entity (company, partnership, sole trader etc.) to which your plan refers. Use a maximum of two sentences to explain what the business does or plans to do. For example: This business plan relates to Xyz Inc which was established in 20XX and is engaged in the production, distribution and sale of frozen yogurt within the xx State.
• Explain the purpose of or reason for the plan (e.g. guide management, raise funds etc.). For example: The purpose of this plan is to help management raise $ XYZ,000 in equity and loans to help finance expansion of distribution into adjacent territories and R&D on new products.
• Indicate who wrote the plan and when. Mention any key external help secured from researchers, consultants etc. For example: It was compiled by Xyz's management team led by Mr. XX, CEO, and assisted by ABC Financial Consultants during February-June 20XX.
• Give contact details (name, position, address, phone, fax and e-mail) for the key person dealing with the plan.

2. SUMMARY

IMPORTANT: Write this summary when your plan is at its final draft stage.

• Hit the highlights and cover all key issues. Avoid detail – focus on matters of strategic importance to the business. If desired, cross-reference the reader to the sections containing detailed text e.g. More details in Section XX.
• Limit this section to two or, at most, three pages. As a guide, the summary should never exceed 10% of the total number of pages (excluding appendices) in your plan. See Length of a Plan.
• Address the needs and interest of the reader: what basic information does the reader need to get orientated or to become interested in the business? Consider devising slightly different summaries for different categories of reader.
• Use one short section or one/two paragraphs to summarize the content of each main section of the plan.
• Give this section plenty of thought and time as it is the most important single part of the entire plan. Its contents should be very clear and interesting. Sell the business and its plans in a professional manner. Be positive by avoid exaggeration. Do not include any material in the summary that is not also covered in the body of the plan. If tabulating data, use simple, high-level tables.

3. Mission, Strategies etc.

• Limit this entire section to two or absolute maximum of three pages by focusing on major and long-term issues. Use succinct, affirmative statements and make every noun, adjective and verb important.
• After the summary section, this is probably the most important element in the entire plan as it sets the direction, tone and framework for the detail that follows. If the proposed strategies and their rationale are flawed then the whole direction of the business may be wrong.
• To compile this section, considerable research needs to have been completed particularly on markets, competition and sales potential. See 6. Profiles of Target Markets.
  • 3.1. Vision Describe what your business will look like in, say, five years time. Indicate its likely size and the nature, breadth and depth of its operations etc.
  • 3.2. Mission In one succinct paragraph, describe the central purposes and activities ("mission") of your business. Explain concisely what the business is about - along the lines of a so-called "elevator pitch".
  • 3.3. Values Describe the business's values and the ethical standards it will apply in dealings with stakeholders, customers, suppliers etc. A sentence or two should suffice for most businesses. If your organization is NFP (not-for-profit), you may wish to expand on its values using bullet points.
  • 3.4. Objectives Briefly, explain the promoters' (or shareholders', management's) underlying long-term objectives in setting up (or expanding) the business.
  • 3.5. SWOTs SWOTs ( Strengths, Weaknesses, Opportunities and Threats) are mentioned here to highlight the importance of addressing them in the 3.6. Strategies subsection that follows. What are the business’s real SWOTs? Be very honest about identifying any major strengths, weaknesses and threats and justify opportunities based on market analysis and research rather than on wishful thinking or supposition.
  • 3.6. Strategies Use bullets to highlight up to eight (or so) key strategies (actions, programs, projects, operating methods etc.) in relation to major functional areas - markets, sales, products/services, technology, finance, management, operations etc. Be sure you are presenting realistic, medium-term strategies and not merely short-term tactics.

4. Present Status

Use this main section to review the background to your business and summarize achievements and performance (financial, sales, technical etc.) to date.

• 4.1. Background Review the history of the business (or the origins of the idea if a start-up). Introduce the original promoters/shareholders in the business and explain in broad terms how the business evolved in terms of products/services, customers/markets, funding, management, R&D etc. Consider constructing a simple, short table showing the key events in the history of the business.
• 4.2. Progress to Date Explain the development of the business to its present status from operational, sales/marketing, R&D and financial perspectives. Make use of simple, high-level tables and charts to illustrate trends. Relegate detailed material to appendices and/or use footnotes to discuss issues, events etc. in greater detail without disrupting the flow of the main text.
  • 4.2.1. Sales & Marketing Use simple tables to help summarize historic sales growth, customer/product segmentation, market shares, key product volumes, prices achieved etc.
  • 4.2.2. Operations & Management Review the operations of the business in terms of activities, facilities and resources used. Include a short discussion and high-level tables covering employment, output levels, capacity growth, utilization etc. Describe key capital investments. Review developments in management and systems. Identify key managers (and directors). If profiling them, limit yourself to 2-3 lines for each and refer reader to 10. Management & Administration and/or an appendix for more details.
  • 4.2.3. R&D Review progress with R&D in terms of projects, resources and costs. Indicate the status of projects and expected completion dates.