How to write a business plan

February 14, 2011 | By More

Even the most experienced people in large corporations have difficulty writing a good business plan.  That, however, should be small consolation to the new entrepreneur.

The purpose for a business plan is primarily for someone else, not usually yourself. After all, you already know what you want to do and what you need to do, right? If the answer is no, then stop here and go figure it out. You are not ready yet.

For the new entrepreneur, having a well written business plan is an important part of raising funds, i.e. articulating why your idea is worthy for investing — by someone else. In principle, what investors want to know about your business is relatively straightforward. Principally, there are three questions: “What is your idea?”, “How are you going to make money?”, “When will I see some returns?”

Of course, as you explain the answers to these questions, other questions come up. These subsequent ones are invariably of the type: “How does your idea compare with such and such company?” or “Who else is doing this?”, “Why should I invest in you?”, “Where will you spend your money?” and so on.

The business plan is a document – one that attempts to address these key questions to give the reader, including your own management team, a sense of what your business is about. It should give them some measure of confidence of what you are planning, and perhaps interest them into further questions and eventually commitment.

To address the questions described above, typically the business plan will need to be broadly organised into standard sections, although this is not necessarily a definitive list:

  • Business Summary or Concept & Long Term Vision
  • Product or Services offered
  • Markets identified & Initial Target Market chosen
  • Marketing Strategy
  • Product Development Strategy
  • Building partnerships and supply chain
  • Identification and evaluation of Risks
  • Financial Projections

Putting the business plan together in this way is often a good exercise to assess if you have thought through the full potential of your business idea, and the possible problems you may face (and plan for it). In so doing, it will give others a measure of confidence that you are someone they want to invest in. You didn’t just skim through these issues, did you?  ‘Cos if you did, the reader will spot it right away. Remember, they read many business plans a week – this is probably your first!

Once you have thought through these points and written your business plan, you should be able to explain that clearly and succinctly, right? Since you have been working on this 20 hours a day, you should be able to explain your business idea easily and clearly, sometimes in an elevator and without use of slides. You never know when you will meet this angel with bags of money.

We will discuss the topic of raising funds in another article.

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Category: Managing your business, What's Next?

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About the Author ()

EngTong, pioneer and innovator. Graduated from Imperial College London with an MBA from Cranfield School of Management. Lived in Scotland, England, California, Beijing and led teams in Italy, France, Japan, Taiwan and Malaysia to do the impossible. Now based in Singapore and believes the future is to blend the sophistication of western management practices with the strength of Asian Values. Trained as a Chartered Engineer. Member of IET, Associate of City and Guilds and a certified SixSigma Champion.

Comments (3)

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  1. PS says:

    Short & sweet as always! I have previously signed up for a business plan workshop, guess I can give it a miss liao 🙂

    Cheers,
    PS

  2. A Arthur Lau says:

    Your 3 questions above are all that a mezzanine finance investor will ask and if an entrepreneur is attempting to shake money from his deep pocket, just find the answers to these 3 simple questions of “What is your idea?”, “How are you going to make money?”, “When will I see some returns?” and the entrepreneur will most probably bag the deal. I like your idea of when an entrepreneur is so well versed with this business plans that he does not need slides to do a presentation but can verbally communicate it at any place, eg the lift.

    • Error: Unable to create directory uploads/2017/06. Is its parent directory writable by the server? ET says:

      Business, like life, is really very simple. If you have to make a presentation complicated, the chances are nobody, including yourself, can see the wood for the trees. So, always try to answer the fundamental question: why am I doing ‘this’?