Any entrepreneur in the making needs to know what makes a winning business plan, which can make or break a business even before it opens its doors.
First: use clear and simple language. Avoid slang and fancy words. Set out your points logically so the plan is easy to read and understand.
Your business plan should include an executive summary, a description of the business, an overview of your industry, a statement of your goals, a description of your product or service, an analysis of your market, a description of your operation, lay out your costs and the prices you will charge, and explain how you intend to finance your venture.
The executive summary should outline all the important aspects of your business idea. It must demonstrate your knowledge of the business opportunity you want to take. This brief section is where you capture your reader's interest.
The business description provides a profile of your venture. It describes the type of business you have chosen, the name and owners, its location and short details such as its age that would interest the financiers.
The overview of your industry describes the economy of the area you are tapping into. Describe industry trends and characteristics, making it clear you will be able to identify opportunities as they appear.
Your short- and long-term goals state what you are planning to do now and when your business matures. Will you sell or expand? Investors want to know your plans before they will cough up any money.
The product or service you offer is the foundation of a business and you should give a detailed description. You should be able to say what sets your business apart from others, the "unique selling proposition" business writers love to discuss. Explain here what you do better than competitors.
Your market research provides you with the information you need about your target market. Use this information to tell financiers about the potential market, your target market and your share of it.
The description of your operations must talk about the day-to-day running of the business, including its location, the resources and equipment you need, the number of staff and how you plan to manage it.
Pricing is generally determined by the costs of production and of bringing the product or service to your market. Costs should include labour, running expenses, salaries and the profit margin.
The way you plan to finance your business is the most critical part of your business plan. Know your arithmetic or get someone who is good with figures to help you with this. Bankers and other investors usually start with this section to establish if your business plan is worth reading. Failure to show your expertise will scare off potential financiers.
Clearly state where the money to finance the business will come from. Most bankers will look more kindly at a proposal in which you contribute a portion of the start-up funds, which shows you are serious about the venture. But do state your preferred source of finance if you lack capital.
Express your points clearly so that everyone who reads your business plan understands your objectives and recognises that you know how money works.
lFor more information contact the Umsobomvu Youth Fund on PO Box 982, Halfway House, 1685. Its main office is in Block P, Central Park, 16th Road, Midrand. Alternatively, visit http://www.youthportal.org.za.