Tips and Tricks for a Successful Business Plan
Here are some useful tips, tricks
and rules of thumb for every section of your business
Cover Page and Table of Contents
- Obtain a copyright on your business plan and mention
that on the cover page and on all the other pages, preferably
in the footer.
- Reinforce the company identity with your company logo
on this page. If you have a "by-line" for
your business use it on this page.
- If you can use any of the art-work developed for
your marketing brochure without cluttering the page,
use it here. This will convey the image and the positioning
you are trying to develop for your business.
- You may also display the amount of money that you
are seeking to raise through the Business Plan, along
with the stage of development your business is in (seed,
start-up, etc). Some investors also like to see the
highlights of the plan on the cover page as it helps
them to make a quick assessment of what to expect from
the business plan.
- Write this section after you have completed writing
the entire plan.
- The length of the executive summary should be limited
- 2 to 4 pages.
- Use charts, tables and diagrams to illustrate or emphasize
your points. Summary financials should be presented
in the form of bar charts and the like.
- Use short sentences, simple language, and no jargon
The Company and Product/Service
- Start this section by describing what the company
does and which industry it operates in.
- Emphasize your key achievements in the past. Also
explain the bottlenecks that may have limited your achievements;
and how these constraints will be addressed in the future.
- Demonstrate how the success you achieved in the past
was based on certain factors which you will continue
to exploit in the future.
- State out what makes you and your services different
from the others in the market.
- Give a reference to all trade associations that cover
your industry. Use material supplied by these organizations
to support statements and assumptions you have made
throughout your funding request.
- Use numbers as well as trend information to describe
the current market and its potential. Growth, declines,
and new markets opening up are key information. Use
Charts, tables and graphs for maximum impact.
- For a seed stage business, a well documented market
research report from a professional agency will go a
long way in giving comfort to your potential investor.
- Often a company's offerings compete in more than
one market. For instance, a company that sells its proprietary
software product may also deliver consulting services.
In such cases, it is essential that the size and growth
rates for the services market be separately noted from
the size and growth projections for the product market.
- Search out all companies who offer competitive or
related products. Define those who offer complementary
products in the same or similar industries. Explain
how competitive relationships can be turned into joint
ventures, strategic partnerships, buyouts, acquisitions,
etc. in the future. Investors will take comfort in the
fact that you have defined possible exit solutions if
things don't go as planned.
Sales and Promotion
- Do all necessary research to keep your prices competitive.
Some trade associations provide benchmark prices in
the industry. Review these prices to evaluate their
suitability to your business.
- Start-ups are more likely to be successful if they
focus on a highly specific, very narrow target market.
General markets are usually dominated by large, well-established
- Use flow charts to graphically depict how the service
or product is delivered to the customer.
- After you compute your annual advertising cost, compare
it with that of your competitors. Advertising expense
is one of the operating ratios (expenses as a percentage
of sales) that industry associations gather. If your
estimated advertising cost is out of sync with the average
cost in your industry, you should take another look
at your strategy.
- In this section you need to show projected, income
statements, balance sheets, and cash flow. Existing
businesses should also show historical financial statements.
The time frame for projections depends upon the complexity
of the business, but three to five years is generally
acceptable as the standard.
- For each projection prepare a sensitivity analysis
to produce the "best", "likely"
and "worst "case scenarios.
- Clearly state the assumptions on which your financials
have been prepared.
- Pro-forma income statements should show sales, cost
of operation, and profits on both a monthly and annual
basis for each plan year. For all but the largest businesses,
annual pro-forma balance sheets are all that are necessary.
Cash flow pro forms should be presented in both monthly
and annual form. If your business is already established,
past annual balance sheets and income statements should
also be included.
- Include information that will assist potential investors
in understanding your projections.
- It is important for you to understand how to compile
each financial document and what they mean. Many entrepreneurs
consider themselves more marketing and creativity-oriented
than finance-oriented and they dislike studying financial
statements. If that applies to you, remember that it
is essential for you to learn the basics of business
finance so that you can run your company successfully.
- Provide separate schedules which make up the big
ticket items like the capital expenditure and employee
compensation costs (esp. for service businesses). Also
provide a Statement of Sources and Application of Funds
to explain clearly how the funds are being generated
By Venture Ahead