Part 2: Getting Started
This month’s blog is going to concentrate on how to get started when writing your funding business plan. Staring at a blank page and trying to get inspiration is often very daunting, especially as most people have never had to write a funding business plan before.
I always start by deciding on the structure of the plan. It has to flow in such a way that the reader not only understands what the company does and how it will go about doing it, but also it must cover all the essential areas of interest, without repetition, and above all it must excite the reader and distinguish your plan from the pile of others sitting on an investors desk. Remember you are writing a document that has to contain what an investor expects to see and not what you want to say.
There is no mystery about the structure, just think logically about what an investor wants to know and the best way of leading him/her through the detail.
The most important part of the plan is the executive summary. This page and a half summarises the 9 areas of the plan that an investor expects to see. I give more details later in this blog.
After the executive summary the structure should flows in a logical manner;
What is the structure of the company and at what stage of development is it at?
What are the company objectives in terms of turnover and profit?
What are the products, the need, description, and proof of concept?
The marketplace, description and size and where do you fit?
The sales and marketing plan, including all the detailed assumptions that have been made.
The operations plan, how the company will run, the location, the people requirements, the order and fulfilment flow.
Who are the management team, their track record, experience?
The financial model, explained in words for those that do not like spreadsheets.
The financial model, with spreadsheets for P & L and cash flow for 3 years, done on a monthly basis, and a balance sheet.
As stated before the executive summary is the most important part of the plan. Investors will read it and then decide if they want to finish reading the plan or throw it away. It should be no more than 1.5 to 2 pages in length and it should contain the mandatory 9 points: A description of the business; a description of the product or service, the marketplace; the potential of the business; the 3 year turnover and profit forecasts; what investment is required and what it will be used for; what investment have the directors made; what are the prospects for the investor and what is the exit strategy. The executive summary is normally one of the last parts of the plan that is written.
Colour and pictures are very important in a plan. Give the section headings a colour and add pictures that help explain the product or service. Make your plan different to all the others and more visually appealing.
Then you actually have to start writing. I always find this difficult, but once I have started the rest just flows. So I start with what I consider to be the easy bits, but also bits that make me think about the company. I normally start by drawing the organisation chart, making certain I have included all the people I need for 3 years. Then I create the SWOT analysis (Strength, weaknesses, opportunities and threats and after that I write the unique selling points section. The point is you do not have to start writing at page one. Start with a section that you feel comfortable with and the rest will come naturally.
Next month, in part 3 of this blog, I will describe what should be included in each individual section of the plan.