How to build a (good) business plan?

Update from an article published on August 30, 2021

TL; DR:

  • A high quality business plan is exhaustive and fluid, it reflects the entrepreneur’s vision and reliability.
  • The form should be as neat as the content: concise and clear.
  • It is divided into three parts: descriptive, financial and operational overview.
  • Clearly explain your financing needs.

Write the descriptive part

The Business Plan (BP) is one of the reference documents for any business creator or buyer. It gives the entrepreneur, as well as future investors and partners, the opportunity to get a clear and fair idea about the project and its ambitions. A key document for any request for funding, which also allows the project manager to ask and check the clarity of the vision he has about his business.

There is no universal business plan model, as it must correspond to a project, but there are nonetheless common and essential steps to follow when writing it. The business plan is obviously not made “out of emotion”, it follows a logical reasoning that unfolds and demonstrates the potential of the project.

The descriptive part is the first step in your BP. That includes, according to Romain Dehaussy, partner at Cambon Partners:

  • Contextual elements in relation to your market: how is it a big problem that is getting worse and how is there a lot of money to be made?
  • A presentation of your solution: how does she solve the problem? What angle was taken (high level views) and how it helps customers (low level vision)?
  • The size of your marketwhich must be significant.
  • Details about your competitionwhile it indicates that the competition is not scaring you.
  • Your strategy in the short and medium term: “We want to increase our sales and marketing forces, especially abroad, and bring out crazy complementary products.”
  • Your past achievements: “We easily manage to sign customers. They depend on the solution. They go into the luxury market thanks to her.”
  • Some ingredients in your recipe: what do you do differently? It can be marketing, sales, product, tech, etc.
  • Your personal conclusion: “We are looking for X million euros.”

Of course, there’s nothing stopping you from briefly recalling general information contained in other documents – such as your pitch-deck: a presentation of your team, your products or services, an analysis of your market and competitors, or even a detailed explanation. of your business model.

Write the financial part

This is the part where tables of all kinds rub against your text analytics. This section demonstrates the financial viability of the business and provides a five-year overview of your business. Think of monthly your forecasts for the first two years. This makes it possible to better clarify its strategy, by better framing the arrival of new employees, the ramp up sales or internationalization. Another interest: the need for cash will be better defined.

You need to predict with the greatest possible accuracy a wide range of forecast data such as revenue, your gross margins, investments and depreciation, fixed costs and staff costs. Caution is required when estimating your financial indicators and your need for financing. Be careful not to underestimate or, worse, overestimate them.

What does this part contain?

  • An estimate of incomebased on consistent and reasoned assumptions;
  • An estimate of the charges ;
  • The Anglo-Saxon income statement ;
  • Cash low: when will it be achieved and under what conditions;
  • Financing plan: what are the financial needs and planned sources of financing, equity, assistance, etc.? ;
  • Financing plan: for the first year, details monthly;
  • Synthesis ;
  • Finally, the preliminary balance and financial KPIs when relevant.

Take care of your summary

Operating overview or Summary summarizes your entire business plan. However, it does not come to the end of BP, but from the first pages in the form of a note highlighting the main points of the following document. It should be written last when BP is ready.

It is a synthesis that should convince and sharpen the interest of the person who wants your BP in their hands. It is therefore necessary to present the basic principles of the project and answer these questions as briefly and precisely as possible (must not exceed two pages):

  • What is the market? In what condition is it and what are the prospects?
  • What do customers expect from this market and what is the strategy to meet their needs?
  • How does my product / service react to it, with what features or innovative character?
  • What are my goals and what is my competitive advantage?
  • Who is my team, what are their key skills?
  • What will be my distribution channel?
  • What are the overall funding needs of the project?
  • What revenue, operating income, expected profit?

Design your BP as a financial marketing tool

Most business plans are tight and do not invite an in-depth study. Beware of the form with understandable tab titles, a summary, a formulation clear, a relevant color code … Two purposes: to show that you have clear ideas and to guide the reading. A clear BP is a clear project in the mind of the entrepreneur, it is an expression of his reliability.

Prioritize usability, because no one wants to read a business plan with macros, a weight of 50 megabytes and 50 tabs. Some BPs require computer skills just to unlock them! Only your table will take time (and more!).

Prohibit all “hard” files – and, “as much as possible, the assumptions of the hard, unbound” , notes Romain Dehaussy. Investors should play with the assumptions to own the plan and do crash tests to back up their investment dissertation. It is crucial that the assumptions are easy to modify and that the aggregates that depend on them are clearly identifiable. It is less the result that interests investors than the way to achieve it.

Structure the document to provide multi-level reading. Within a fund, the target groups are different. Establish an appropriate reading level for each of them. For example, consider an overview tab with charts for committee partners who will not dive into the details of expenses and salaries.

Justify your key assumptions and do not overdo it

For each of the key assumptions on which your strategy is based, ask yourself the question of its justification. Two options: (I) your historical performance – number of customers signed after sales in year N-1, for example -, (II) comparisons with other players in the sector. Add these elements to the business plan along with the assumptions.

Remember that too many assumptions kill assumptions. Some BPs include several dozen tabs of hypotheses, simulations in all directions, and an equation of all the micro-aspects of your business. We will forgive you the shortcuts to modeling your rent from the moment the actions on revenue and margin are well documented and credible.

Make sure that BP is in line with the vision indicated on the slide deck

Your BP is the priced version of the slide deck, a document where you state your vision, your fundraising goals, and your action plans to achieve those goals. BP must address these actions by detailing them and placing them over time to show the use of the amounts to be raised.

Arm yourself with a business plan software if it can be useful for you

You are about to launch your business, and although creating the business plan is a significant step in structuring your project, certain tasks may prove to be particularly time consuming. If Romain Dehaussy indicates “never having seen an entrepreneur use it” Many websites and software allow you to relieve yourself of elements such as the financial forecast, the formatting of the business plan, etc.

How to choose a good tool? Check that the software allows you to make a five-year forecast – with a monthly payment for the first year – and edit everything. The reproduction must be clear and professional, but also safe so as not to risk getting your data siphoned off.

What tools are available? Check out Business Plan Shop, Enloop, Izypitch, CreateMyBusinessPlan.fr, My Business Plan, StartMyStory, Evaltonbiz etc.

Do you want to start your own business? Find the latest resources and tools to help you on your journey as an entrepreneur in the sixth edition of Backpack by Maddyness. This is the book that will guide you every step of the way.

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