How to write an effective business plan

There is no one way of writing a business plan  – essentially there is no such thing as a  standard business plan. When writing a business plan, a decision needs to be made as to whether a brief or comprehensive business plan is required. At minimum, a properly prepared business plan or good business plan will include a summary of what the company does or intends to do, a vision and mission statement, values and principles, strategic objectives and goals, a thorough market analysis, the key challenges and opportunities facing the sector or industry and the business in particular, and a quality financial review showing key assumptions, financial requirements statement, cash flow projections, income statement or statement of financial performance projections, balance sheet or statement of financial position projections, break-even analysis, sensitivity analysis and other essential components. Whether the business plan is brief or comprehensive it must address who, what, where, why and how. Covered below are tips on what to take into consideration when writing an effective business plan.

How to write an effective business plan (tips)

1. The business plan must take the targeted audience into consideration so as to drive the right approach.  For example, investors and banks focus on the commitment, skills, competencies and expertise of the owner and key management as well as a good understanding of the financial requirements and other related content of the business.
2. The business plan must have life. Treat it as a live document with a heart beat – the business plan is the heart beat of your business particularly at start up phase.  The business plan must demonstrate the competence, expertise, culture, direction and other related hallmarks pertaining to the business.
3. The business plan must be well written and have a clear business strategy. In essence, the strategic intent – in terms of the vision, mission, values and principles, objectives (long term, medium term and short term), must be aligned and well formulated. These must be ideally devised after having a thorough understanding of the Industry that your business operates in as well as the external changes (Political, Economic, Social, Technological, Environmental, Legislative/ Regulatory)   taking place in the environment.
4. Your business plan must ideally take the following into consideration: the key functional areas of your business such as marketing and sales, finance, operations, or production human resource and so on. All these functional areas must have well set out sound objectives and strategies.
5. Quality is king – focus on excellent quality content as opposed to quantity that is usually confusing, obscure, questionable and sometimes vague.
6. Lastly, a good understanding of the key contents or information pertaining to your business plan is necessary. The key contents and issues include:

1. The importance of a business plan
2. Preliminary stages of writing a business plan
3. Company overview or background
4. Vision, mission, values and objectives
5. The external environment analysis
6. The internal environment analysis
7. Strengths, Weakness, Opportunities and Threats (SWOT summary)
8. The market and competitors
9. The product or service offering
10. Marketing and sales plan
11. Operational plan
12. Human resource plan
13. Risks and contingencies
14. Financial information
15. Supporting documents – Annexes