- Cover
The cover should include the business name and contact details. You should consider whether the plan needs to be marked ‘confidential’.
Table of contents
This is a list of sections and sub-sections, with page numbers.
Executive summary (1-2 pages)
If you are seeking external finance, this is probably the most important section of the plan. Many equity investors will only read the full plan if they find the summary attractive. It should only be written after the full plan is complete, and then it should be written with the reader and purpose of the plan in mind. If it is to be used to attract funding, it should state what is requested from the lender or investor and how they will benefit by providing the funds.
It must be a summary of the plan - not an introduction. It should highlight the nature of your product/service, target customers, value proposition and competitive advantage. It should appeal to the reader by highlighting the distinctive capabilities and potential of the business, including the financial return. If the plan is written to attract an equity investor it should state what deal you are offering. For example, ‘20% of the business in exchange for £100,000.’
Above all, the executive summary must be focused and succinct – no more than one or two pages long.
Business details (1 - 2 pages)
This section covers basic information such as business name, address, legal form and ownership. It should include:
A description of your product/service;
Your mission and vision statement;
Your aims and objectives.
If this is an existing business, you should include a brief business history.
Industry and market analysis (2 - 3 pages)
This section provides background information on your industry sector, the market segments within it. It should take the form of a narrative informed by academic models such as a SLEPT analysis and Porter’s Five Forces. You should review your competitors and their strengths and weaknesses. The more you know about an industry and market, and the competitors you face, the more confidence your readers will have in your ability to compete within it. This section should include:
Industry size, growth, structure (macro & micro/local level);
Industry and market trends (macro & micro/local level);
Market segments and reasons for target market(s) selection;
Buyer behavior across segments;
Competitor analysis (strengths and weaknesses);
For an existing business – market share.
In most industries there are some key success factors that industry players have to be competent in to compete. These need to be highlighted but judgement is required about what is important for your particular venture.
Customers and value proposition (2-3 pages)
This is the section where you outline your target market segment(s) and the value proposition(s) for your product/service. It is essential that your ‘unique selling proposition(s)’ is clearly and simply articulated. In doing this you should highlight your differential advantage over competitors. The more the points of difference and the stronger and more sustainable these differences, the better.
This is where you also set out your sales targets. If you have firm orders for the product or service, be sure to mention this.
Marketing strategy (3-4 pages)
This section provides the details about how you propose to achieve those sales targets – not only the details of your marketing mix but also the details of your sales tactics (how the product or service will actually be sold). As well as the launch strategy this should also highlight the growth potential through market and product development, your competitive reaction and strategy for establishing your brand. It should include:
Price, promotions, distribution etc.;
Launch strategy;
Sales tactics;
Brand development;
Competitive reaction;
Product and market development;
Growth potential;
Investors are always particularly interested in pricing strategy because this is a prime determinant of the profitability of the business.
Operations plan (2-3 pages)
This section outlines how your business will be run and how your product/service will be produced. What goes into the operations plan varies depending on the nature of the venture. However, what is important is that the key activities for your venture are highlighted. It must convince the reader that you understand the operation of the business – how to do whatever needs to be done to deliver your product/service. So, issues of business control, if critical to the business, need to be covered. Also, the prospect of scalability - should the business prove to be even more successful than planned - can be addressed in this section. What are your strategic options? The content of this section is difficult to predict but might include:
Key operating activities (eg. manufacturing processes, business model etc.);
Partnerships;
Business controls;
IP issues;
Scalability.
Management team and company structure (1-3 pages)
This section outlines all the people involved in the venture - details of their background and experience - as well as the organizational structure you are adopting. A new venture team with an established track record in the industry or with relevant experience will certainly add credibility to any start-up. Remember that investors ultimately invest in people, not products. An experienced Board of Directors can achieve the same result. Brief CVs can go in the appendices. For larger start-ups, an organization chart can go in this section. This section should include:
Key people, their functions and background;
Business organization or structure;
Directors, advisors and other key partners;
Skills gaps and plans for filling them.
Resources (1-2 pages)
This section describes the firm’s facilities, equipment and staff requirements. It should include:
Premises and facilities;
Machinery and equipment;
Staff.
Financing (1-2 pages)
This section highlights the finance you need to launch your business. External funders will expect you to contribute some capital. Lenders will be interested in the risks they face and the security they can obtain. Equity investors will be interested in the overall return they might make and how this might be realised. This section should include:
Founders’ contribution;
Loan and/or equity finance requirements;
Gearing/leverage;
Time scale and exit routes for equity investors.
Financial projections (1 page summary, plus appendices)
Typically financial projections for three years are expected by funders, with a monthly cash flow forecast for the first year. A very small scale start-up might only provide financial projections for the first year. Five years forecasts might be expected for larger projects where significant commercialization risks have not been resolved. You should provide a one page financial summary and place the detailed projections in the appendices.
Financial details going into your appendices should be as long as it takes to provide all the information required. These should include:
Income projections;
Cash flow projections;
Balance sheet projections;
Key ratios;
The assumptions on which your financial projections are based, particularly the basis for your sales projections.
Risks and strategic options (1 page)
This section should identify the key risks you face and explain how they will be monitored and mitigated. You need to identify what are your critical success factors and the strategic options you face should these risks materialise. Strategic options are valuable because circumstances can, and do, change. They give you flexibility in a changing environment. This section should include:
Identified risks;
Risk monitoring and mitigation;
Critical success factors;
Strategic options.
Key milestones (1 page)
These milestones, often incorporating critical success factors, highlight the progress needed to launch and grow the business. They might include prototype completion, formalization of partnerships, obtaining finance, securing of key customers etc. This section gives an overview of the sequence and timing of important events.
