GUIDE TO WRITING A SIMPLE BUSINESS AND REVENUE PROJECTION PLAN FOR YOUR BUSINESS
After all, if you don’t know where you’re headed, how will you know when you get there?
Take a look online and you’ll see numerous websites and guides devoted to writing business plans and your local bookstore will also have more than their fair share sitting on the bookshelves. But there is absolutely no need to make the process any more difficult than it should be following this easy to follow guide.
When sitting down to draft up your business plan, take time to think of the three following things:
1 Who Are You Writing The Business Plan For?
You may be wondering why you need to write a business plan in the first place; after all you may be thinking that you are the only one ever going to see it. It is quite possible that that may be true but this is really the one opportunity for you to sit down and really think about your business, its implications and the assumptions about your business that you may have made. Without thinking about the risks involved in taking certain strategies, you could run into trouble before you know it.
If you require funding for your business venture, your potential investor will certainly want to have a look at your business plan to ensure that they are investing in something that is worthwhile to them. This is where your business plan becomes your biggest asset and sales tool to raise the finance that you need.
2 Avoid Procrastination
A business plan is not an exact science of how your business will succeed and develop. There will be constant changes to your business plan that need to be made as your business grows over time and also when you need to take other uncontrollable factors into consideration like a change in law or tax. For this reason, there is absolutely no need to plan your business right down to the last cent. If you try and do this, you could find yourself taking forever to complete the plan and getting more and more frustrated with yourself that it still isn’t quite right. This could also put you off writing it altogether if it just seems too hard to get it perfect. So don’t sit there worrying over every last detail and not really getting anywhere; think about the most important aspects of your business that you need to get down on paper and just write it!
To continue further with what I have mentioned above, a business plan should continually evolve and grow with you and your ideas. Like an airplane flying to its destination, there needs to be little adjustments here and there on the way; it is never a straight flight path. Almost as soon as the plan is finished, there will be aspects of it that are already out of date. Successful business owners know though, that you need to continually adapt and change to your customer or client needs and the market that you serve. So don’t throw the plan into the bottom drawer of your filing cabinet; make sure that it is something that is to hand, read and updated on a regular basis.
What Will Your Potential Investor Be Looking For?
For many, the purpose of writing up a business plan is to raise funds for their intended business so it’s important to think about what a potential investor may be looking for when presented with a business plan.
The first thing that they will assess (and they will have decided this within two minutes of you entering the room) is whether or not they think you have what it takes to make the business work.
They will likely form their opinion on how you are dressed, how confident you are acting, what relevant experience you have in your industry, whether you have thought about your strengths and weaknesses and addressed them and ultimately they will want to know whether or not you really have the desire and drive to see it through.
They will then think about whether or not the business concept is exciting to them. This will again be a fairly quick decision of around 4 minutes or so.
You can’t force them to get excited but what you can do is to try and put forward to them exactly why your idea is different to the other three courier services they have seen this week. I’m sure they will be much more interested if you state that you compete in triathlons and know your intended delivery area like the back of your hand therefore you will be able to make your deliveries at twice the speed of your competitors!
Well, this is where the next part of our lesson comes in, the revenue projections!…
Your revenue projections come down to one thing; cash flow. The money that comes in to the business and the money that flows out again.
The total amount of cash that you receive depends on the price that you sell your products or services for and the number that you can sell. It is important not to set your price by how much you can produce the product or service for, rather it should be determined by what your customers are willing to pay taking into consideration of course that you need to cover costs.
The number of products or services that you sell will come down to how big your market is and how many products or services you can physically produce per day. Before sitting down to writing your business plan, you really should already know through testing and research that there is a big enough target market for your services and what they would be willing to pay.
To put it simply, there are two types of costs; your direct costs and your overhead costs.
Direct costs are what it costs you as the service or product provider to create the product both in raw material costs as well as the cost of your time which is an important point to factor in.
Overhead costs are the fixed costs that any business owner has such as marketing costs, telephone and internet connection, professional fees, rent etc. There will be times of the year when your business may be slower than at other times and so you need to think about these yearly costs of operation so that you have enough cashflow to survive leaner months.
Once you have determined how many you could sell, you also need to determine how many you must sell to meet these overhead costs. What is your break-even price? What is your break-even level of sales?
Now that we have the reason why we need a business plan and who it is for, it is time to look at a simple checklist to see if we have everything we need to put it all together.
Simple Business Plan Checklist
A simple business plan consists of six key components:
1. Brief Summary of your Idea
- Explain what your market is and what your unique idea is.
- Forecast of profits
- Longer term prospects
- Finance required
2.You and Your Team
- Your track record and key achievements
- Who will be helping you in your business venture?
- Strengths and weaknesses analysis
- How you will overcome your weaknesses?
3. Your Market
- What your market is and what needs is it servicing
- Your target market, its current size and your predictions of growth
- Detailed analysis of the niche that your product or service will fit
- Who your competitors are and how you will compete against them
- What is your USP (Unique Selling Points) of your product or service?
- A SWOT analysis: Strengths, Weaknesses, Opportunities and Threats
4. Sales and Marketing
- Price of your product/service
- Where will you be operating from?
- Who will be doing the selling?
- What plans for promotion of your products or services do you have?
5. Operations Management
- Who are your suppliers?
- What equipment do you need?
- What are your forecasts? (provide evidence)
- Monthly cash flow forecast for the first year and quarterly forecast for the second year
- Profit and loss forecast
- Balance sheet
It’s always a good idea to keep a shortened one page business plan to hand on your desk and look at it on a weekly, if not daily basis to stay on track of your goals.
1 PAGE BUSINESS PLAN EXAMPLE
A vision provides the inspiration for both your daily operations and your strategic decisions. e.g Within the next three years, grow (your business) into a $( ) annual company that specializes in (your specialist product or service).
The mission statement should be a clear and succinct representation of the enterprise’s purpose for existence. It should incorporate socially meaningful and measurable criteria addressing concepts such as the moral/ethical position of the enterprise, public image, the target market, products/services, the geographic domain and expectations of growth and profitability.
1st year revenue -
2nd year revenue -
3rd year revenue -
List 3 to 4 different strategies that you will use to reach your companies objectives
What three or four action points do you need to do now in order to reach your objectives?
Take at least one day out of your ‘bus-i-ness’ to create your business plan, then keep it accessible so you can adjust and grow the plan and keep on track.
I added an action steps check list quarter by quarter for my first year to the Business Plan for Miss Independence. I found this to be very helpful in long term planning and staying patient and on track. I also found that it helped me when I occasionally felt overwhelmed by the enormity of the project.
Good luck and have fun!