Business Plans: Writing a Plan for a New Business

Starting a new business? Learn how to prepare a professional business plan for banks or venture capital companies

How to write a business plan.If you're thinking of starting your own business it's important to get it right from the outset. If you need to raise venture capital, you will need a well thought-out and clearly written business plan. If you already have the capital, you don't need to spend so much time on the detail, but you really must develop financial projections for at least the first five years to ensure you have sufficient working capital for your fledgling business to survive. One of the principal reasons new ventures fail is because they are under funded; many entrepreneurs simply underestimated the difficulties and costs of setting-up a new business.

Our financial planning software for business plans and budgets, can help you quickly simulate best-case and worst-case scenarios and let you get a feel for how profitable your business will be under varying market conditions. Its a good idea to remember the old proverb from the Scottish poet Robert Burns: "the best-laid plans of mice and men often go awry"! When developing your business plan, plan for the worst but hope for the best.

How to prepare a business plan.If you are presenting your plan to banks or venture capital companies then you obviously want to prove your venture has the possibility of making a handsome profit and good return on their capital. However, they may well ask if you have thought about how you would cope if things don't work as planned. You can then produce your worst-case scenario, or perhaps a second worst-case. Keep your worst, worst-case to yourself, but by planning for it you should survive your first few critical years without any problem.

If your own finances are insufficient and you do need to raise additional venture capital, then you will have to write a detailed business plan. Venture capital companies, banks and accounting firms often have their own guides explaining what information to include and how to present it, but there are also numerous books on the subject (click below to see our selection of books on business plans from Amazon).

To give you a quick idea of the sort of areas you should be thinking about, we have listed the main considerations you should address in your business plan below:

1) Outline Summary

Venture capital firms and banks receive lots of business plans each week. Your summary should present all the key elements of your plan in one or two pages. Your objective is to capture their attention and make them want to read on.

2) Management & Organisation Information

Venture capital firms are keen to know who will be running the company and what sort of track record they have had in the past. This section should include your founding management team and a description of their individual skills and backgrounds and how these will contribute to the success of the venture.

3) Product Information

This section should describe your products or services. What is their unique selling position, i.e. what is different about your products or services that will cause customers to buy them? You should also include information on how products will be manufactured, the levels of research and development that will be necessary, issues relating to protecting products with patents, etc and any other significant operational issues.

4) Marketing Information

You need to convince the venture capital firm that there is a market for your products or services. How large is the market? Describe how its segmented and who your principal competitors will be. You need to explain why customers will buy from you rather than your competitors. You will also need to address issues of pricing, promoting and distributing your products.

5) Financial Information

If your company is already in operation you will need to provide financial statements for the previous years. Both new and existing companies will also have to present financial forecasts for the next three to five years for profit and loss accounts, cash flow projections, balance sheets and capital expenditure.

Budget Controller: financial planning software for business plans and budgets.For many, creating financial projections will be the most complicated section, but fortunately our software tool for business plans and budgets can help you to quickly produce all the financial forecasts you need. Simply add your principal assumptions about sales, costs and investments in equipment, etc and Budget Controller will automatically generate all these reports and product all the relevant information the venture capital firm will need to evaluate your plan and its potential return on investment.

Business plan software for Excel.Our business plan software product, Budget Controller is the ideal tool to create professional business plans. It uses business modelling techniques that allows you to quickly simulate results and do "what-if" analysis to help you get a real fell for financial viability of your new business venture.
Click here to learn more about Budget Controller.

This international bestseller is THE ultimate guide to business planning. Whether the goal is raising start-up or development finance for a new business, requesting venture funding from a corporate parent.
Click here for more books on business planning from Amazon.