Business decisions should always be made on the strength of the underlying business idea, but it is much easier to come to a decision if the idea is communicated simply and clearly in a well-written business plan. The discipline required to articulate the business’s strategy, tactics and operations in a written document ensures rigorous analysis and greater clarity of thought. If the strategy of the business cannot be clearly and convincingly described on paper, the chances of its working in practice are slim.
No two businesses are ever identical and no two business plans are ever alike, but good business plans always contain a number of common themes. They “tell a story” and explain how the business will achieve its objectives in a coherent, consistent and cohesive manner. The “story” will be focused on the needs of the customer. The plan will identify the market, its growth prospects, the target customers and the main competitors.
It must be based upon a credible set of assumptions and should identify the assumptions to which the success of the business is most sensitive. It should also identify the risks facing the business, the potential downsides and the actions that will be taken to mitigate the risks. As the blueprint for the business, it should describe what makes the business different from its competitors: its source of competitive advantage and how it will be sustained in the longer term.
It should describe the experience and track record of the management team, and, within larger organizations, the plan should have the support of those in the different functions who will be involved in implementing it. Most importantly, it should identify the funding being sought from potential investors, how the funding will be used and the investors’ expected return.
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