How To Write A Good Business Plan Or Proposal For Potential Investors

Are you considering starting a new business or just planning to put together a convincing business plan?

Have you been faced with this question; how to write a good business plan?

Writing a good business plan will not only help you capture the strategic operational and financial aims of the business you are writing about, but also help you attract potential investors.

So what are the key ingredients of a good business plan?

You wonder why so many startup businesses fail? Starting a business and making it a successful one largely depends on the ability of the entrepreneur to write a clear and convincing business plan because anything less is heading straight for the bin.

The main idea behind a business plan is to convince the intended recipients of such business plan which include investors and lenders, family and friends and anyone with capital to invest in the project or business.

Most business plans fail to make much impression on potential investors as their shortcomings tend to be obvious even in a two-page executive summary, largely because they are written before enough real work has been done to create a solid foundation.

A good business plan should contain these 5 Key ingredients

      1. An initial executive summary, summarising the detail of the business proposal
      2. A written overview of the business’ aims
      3. Its product or service
      4. Management team
      5. Financial forecasts and appendices, such as the CVs of key management members, market research data or technical product information.

The body of your business plan should cover several areas in detail as you are expected to give the reason for the business being established which usually includes business goals, for example, whether ambitious growth is desired or a regular, steady trading level.

Also, don’t forget to explain what your business will do in simple terms, highlighting any features that set it apart from rivals.

Include market and competitor information, outlining what part of the market you are targeting, key competitors and what differentiates you from them.

This will enable your would-be or potential investors to understand your clear goal and intention to positively compete with your rivals.

Financial forecast

Think about your sales and marketing strategy, include information on how the product or service will be priced, channels to market, advertising and marketing plans.

Details of key personnel and their relevant experience are also important, as is operational information like office location, special equipment and expected employee headcount.

State the financing you need, based on your financial forecasts and don’t forget to include details of any finance provided by the founder or management team and indicate the key risks to the business and any mitigating action you can take.

Your plan should also include a sales forecast, cashflow forecast and a projected profit and loss account for up to five years’ ahead.

Larger businesses should also draw up a projected balance sheet and make sure that the figures used are reasonable – avoid being over optimistic. The involvement of a qualified accountant in preparing these forecasts is highly recommended.

Additional info from the BBC business

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