How to Draft a Business Plan
There are two basic types of business plan. The working, or operating plan, is one used by the business to coordinate its activities. The term "business plan," however, more frequently refers to a presentation plan, which is used to entice investors and lenders. The content between the two is essentially the same, but the focus of a presentation is geared towards a more polished document that uses standard business vocabulary instead of slang or informal terms.
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Instructions
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Describe objectives. The business plan should begin with a vision of where the company will be at a point in the near future, say five years. This should include all relevant aspects of the business including market share, revenue, sales, number of employees, and any other goals.
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Define a concept. To meet the objectives, the business must have an underlying concept. The concept should answer the question: How does this business take capital investment and transform it into profit? The concept should outline the operations of the business and describe the market for its services or products. The concept should absolutely describe any strategic advantages the business has over the competition or how its approach differs from existing practices.
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Go into detail. After stating the basic business concept, a complete business plan should go into detail in describing the target market, identification and analysis of competition, and operational and management protocols. Each of these should be covered in depth in separate sections of the plan. If the business is producing products, a unique section should detail all aspects of the production process from acquiring materials and inputs to managing schedules and costs of production, and associated personnel.
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Get to the bottom line. The last section in a business plan should explain the business' capital requirements, including start up costs and subsequent costs of maintaining operations. All expenditures should be detailed, from salaries to marketing and production. Sources of expected revenue should be analyzed and evaluated for risks. This financial section should establish the company's profit margins, expected profits and borrowing costs, and list its current assets and liabilities. The form of this section should comply with that of standard financial statements, particularly balance sheets and cash flow statements.
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Write executive summary. After the entire plan is complete, it's essential to compose a brief (one paragraph to one page max) executive summary of the entire plan.This should highlight the most important points and everything you want a potential investor to know up front. First impressions are often hard to change, and the executive summary is usually the first impression of the business plan that an investor is likely to receive.
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Tips & Warnings
Spend some time reviewing sample business plans, especially those of similar businesses. Don't underestimate the appearance of the plan, right down to the stock of paper it's printed on, in influencing potential investors. A working plan that won't be used for presentations, however, can be much more informal.
