3 Tips for Putting Together a Great Business Plan
Putting together a business plan, if you’re doing it right, should be exciting. It should also be an objective endeavor. You might find, as you start putting the plan together, that your business idea isn’t quite as solid as you thought it was.
It’s often said that business plans are living documents. As you’re putting together your plan, don’t be afraid to refine it or change it around a bit as the different sections you assemble reveal that you have to make some changes in your original strategies. Here are three ways you can actually use the information you put together in your business plan in the most productive way possible, rather than trying to find information that makes your business look like a good idea, even if it’s not.
Put Time into and Get Help with the Competitive Analysis
The competitive analysis is a section of your business plan where you will outline to a potential funder the type of competition you are facing in your market. You will use the section to describe and analyze the strengths of the competition and their weaknesses. You will also use this section to describe to a potential source of funding how your business will exploit the weaknesses in your competition.
Be realistic and honest in this section. Make a thorough analysis of your competition so that, when somebody who might find your business takes a look at it, they can tell that you are someone who really does see where all the pieces are before they start making moves. If you have trouble putting this part of your business plan together, either hire someone with a financial expertise or have a friend with that sort of expertise help you. The tighter and more convincing this part of the document is, the easier it is for a potential lender to have faith in your ability to run a successful business.
Cut Revenues and Increase Costs on the Plan
Inc. recommends that, when you have the budget section of your business plan put together, go through it and increase costs by 10% and decrease revenues by 10%. There is a very good reason for doing this.
If you’re putting together a business plan and getting ready to start a business, a bit of optimism goes a long way. However, naïveté will destroy your business before it even gets off the ground. You will have challenges. The idea of adding into your figures the assumption that there will be difficulties is simply based in trying to make the plan as realistic as possible. If you put a little bit of a buffer on both sides, your numbers will be oriented so that your business will be ready for those tough times. Any business can do well when things are good, but successful businesses are those that can weather the worst storms.
Anybody who’s considering investing in your business is going to ask you some very tough questions. The best way to prepare for this is to ask those tough questions of yourself before you even go in asking for a small business loan.
The Guardian, for example, recommends that you go through a long list of questions that you definitely would not want to hear from a potential funder if you are unprepared with a good answer. For example, one of the questions they recommend asking yourself is whether or not you have prepared financial forecasts the real cost of your loans for the business, including finance charges, interest and so forth.
Asking these tough questions before you ever sitting across the table from somebody with the money to make your business a reality rather than just a plan is a good way to be prepared for the worst. If you answer these questions honestly, you can go back and fix your plan so that you address the shortcomings or, conversely, you may find that you have to alter your plan significantly to handle difficulties that you may not have taken into account initially.
One Final Tip
After you have your business plan put together, have it edited by somebody who has good writing and editing skills. They don’t necessarily need to be a financial expert, but you want to make certain that the language comes off as intelligent and educated. If a potential lender can read your business plan and get the impression that it was written by somebody who is really quite bright, that won’t hurt a bit in capturing their interest and, if you’ve taken the other three bits of advice in this article, it could give you a distinct advantage.