I have covered what a business plan is, and the reasons why you will need one. Now, I can just imagine you asking, “Ok, so what goes in the business plan?”

As I said in the most recent post in this series, your business plan will target different audiences. Each audience will be looking for specific reassurances before making a decision about your venture.

In a nutshell, what they are looking for is that your venture will be viable, will get off the ground, grow and be successful. To demonstrate this, your business plan must eloquently cover four main sections: the business; marketing; finance and the management team.

Just so that you perfectly understand this post, it is written from the perspective that you are writing a formal business plan in a bid to secure external finance, either in the form of a bank loan or from investors and/or venture capitalists. With that been said, the more robust and professional your business plan is, the more credibility you will earn, regardless of the intended purpose of the business plan.

The Business
This is where you give the basic information about your business. This should include the company name, address (registered office or location of business) and details of the current owners.

What you need to point out here is the legal structure of your business and who the current owners are. Are you a sole trader, Limited Liability Company, publicly traded company, family-owned company? This is very important, as it will help investors in understanding how the business will be run in the future.

The next important information regarding the business will of course be the purpose of the business and the product or service that you will provide. You will need to demonstrate why customers will want to buy your product and why you think selling the product or service will be a profitable venture. This is a good time to highlight any uniqueness or superiority of your product or service.

If you business is in the Research And Development sector, you may include any patents or intellectual property owned or filed for by the business.

No matter how popular your business sector is, try to present your business plan as if the audience has no clue whatsoever of the market sector or industry. So you should demonstrate the past and current performance of the sector, and its future potential.

Using competitors to illustrate the potential of the business sector can be a good thing, but it will also help if you can credibly show how what percentage of sales you think you can capture. This is a little bit risky here, as you could fall into the trap of unrealistic speculation. What are really important here are that you can clearly identify who your customers are, and how you will go about getting them to buy your product or service.

Really, this section should demonstrate your goals and objectives for the business, your aim for the business and how you expect to achieve success.

Marketing
The first thing about marketing is that you have to identify who your customers are. Some industries or business sectors may have wide ranging types of customers. So, you may need to accurately profile your target customers.

For example, there are many types of domain buyers. There are the domain investors (buy and hold), the developers (entrepreneurs/ebusiness owners), the domain flippers, and then there are those who will just monetize the domains through domain parking. eBusinessDomains.com specialises in selling quality pre-approved domains to entrepreneurs seeking to establish an online business/brand.

Accurately identifying your target customers will help you understand how to position the product or service in the marketplace, and also help with your pricing strategies.

Your business plan should provide a realistic SWOT (strengths, weaknesses, opportunities and threats) analysis of the industry that you are targeting, including competitors, customers and potential demand levels for your product or service.

Your investors will become very suspicious if they believe that you are not presenting a realistic picture of your venture’s prospects. One word of advice, always provide sufficient details about any competition and how you go about dealing with them.

Finance
It is fairly easy to start ebusinesses on a shoestring budget these days. However, your business plan should clearly demonstrate that you are on top of the finances.

This section of the business plan is where you share all financial data on your business/venture. Include any previous year’s accounts, (up to three years if possible), as well as details of any assets or liabilities (loans). Depending on the scale of your business operation, also include the current management accounts, cashflow forecasts and a breakeven analysis if possible.

Of course, if this will be a new venture, then you would only need to focus on any financial resources that you currently have at your disposal, and any possibilities of any realistic future cash injections.

As much as it is important for you to outline your current financial situation, it is equally important for you to provide realistic financial projections (future earnings and associated expenditure).

Show your audience that you are on top of your game by outlining different scenarios for sales, costs and cash flows, for both the long and short term. Remember that realistic estimation is name of the game. Do not dress up your figures.

A projection showing sales figures growing ever steadily will give seasoned investors cause for concern. Similarly, your costs should be properly allocated and projected. Certain products and business types, such as Internet businesses, may need to plan for a large upfront marketing budget. A projection that spreads an equal amount of your marketing budget across the whole year will seem a bit suspicious.

The management
Tell the audience who will be charged with the responsibility of making the venture a success. All background and experience of all the key members of the management team should be outlined.

Depending on the complexity of your business plan, you should attach CV’s for each individual and outline the strengths and weaknesses of the team as a whole.

Business angels feel more comfortable when they have a hands-on approach, and as such often take an active part in the companies they invest. Venture capital firms will have a wide network of contacts that may be able to join the board in a non-executive capacity. So, if you are missing certain skills in your management team, this can easily be solved.

The Executive Summary
Now, the last thing written is the first thing that appears in the business plan – the Executive Summary. This is the most important section and summarises in two pages what is written in detail in 10 or 15 pages.

This section of the business plan should single-handedly sell your idea to your audience. This is where, among other things, you state the company’s mission statement – a few sentences encapsulating what the business does for what type of clients, your aims for the company and what gives it its competitive edge.

The mission statement should illustrate the business’ current situation and your aspirations.

Similarly to the business plan, the executive summary should be clearly written and powerfully persuasive. It should balance sales talk with realism in order to be convincing. It should be no more than 1,000 words.

This summary may be the only opportunity you get to put your case to investors. Venture capitalists refer to the elevator test. If you can’t convince an investor of how good your business is in the time between when the lift (elevator) leaves the ground floor and when it reaches whatever floor you exit on, you may have missed your opportunity.

Venture capitalists are busy people. Remember, a venture capitalist sees hundreds of business plans a year. So you are actually going to the Dragon’s Den.

This post should be sufficient to give you an idea as to what goes in the business plan. Depending on the nature of your venture and the target audience, you may scale down, or need to beef up your business plan.

There is more to come on this topic. Stay tuned.

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