How do you build a (good) business plan?

Update of an article published on August 30, 2021

TL; DR:

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

Write the descriptive part

The business plan (BP) is one of the reference documents for any entrepreneur or buyer. It gives the entrepreneur, but also future investors and partners, a clear and honest picture of the project and its ambitions. An important document for any financing application, with which the project leader can also request and check the clarity of the vision he has for his company.

There is no universal business plan model as it has to correspond to a project, but nevertheless there are common and essential steps to follow when writing it. The business plan is of course not made “by feel”, it follows a logical reasoning, which unfolds and demonstrates the potential of the project.

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

  • Contextual elements in relation to your market: how is it a big problem that gets 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 is taken (high level display) and how it helps customers (low level view)?
  • The size of your market:which must be substantial.
  • Details about your competitionwhile you indicate that the competition does not scare you.
  • Your short-medium term strategy: “We’re going to strengthen our sales and marketing forces, especially abroad, and release crazy complementary products. »
  • Your past achievements: “We manage to sign customers easily. They are addicted to the solution. Thanks to her, they become more expensive. »
  • Some ingredients of your recipe: what else do you do? It can be marketing, sales, product, technology, etc.
  • Your personal conclusion: “We are looking for X million euros. »

Of course, nothing prevents you from briefly recalling general information present in other documents – such as your pitch deck: a presentation of your team, your products or services, an analysis of your market and the competition or even a detailed explanation of your business model. .

Write the financial part

This is the part that contains all kinds of tables next to your textual analyses. This section shows the company’s financial profitability and provides a five-year view of your business. Think about 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, inclined upward sales or internationalization. Another interest: the need for cash is better defined.

You need to forecast a large amount of forecast data with the utmost precision, such as revenue, your gross margins, capital expenditures and depreciation, overhead and personnel costs. Vigilance is advised when estimating your financial indicators and your financing needs. Make sure you don’t underestimate them or, worse, overestimate them.

What does this part include?

  • An estimate of incomebased on consistent and justified assumptions;
  • An estimate of the costs ;
  • The Anglo-Saxon income statement ;
  • Cash low: when will it be achieved and under what conditions;
  • The financing plan: what are the financial needs and planned sources of financing, equity, aid, etc.? ;
  • The financing plan: for the first year, detail monthly;
  • Synthesis ;
  • Possibly, the provisional balance and financial KPIs when relevant.

Take care of your executive summary

The operational summary of management summary summarize your entire business plan. However, it does not come at the end of the 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, once the BP is apparent.

It’s a synthesis intended to convince and sharpen the interest of the person holding your BP between their hands. It is therefore necessary to present the fundamentals of the project and answer these questions as succinctly as possible (no more than two pages):

  • What is the market? What condition is it in 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 respond 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 my distribution channel be?
  • What are the overall financing needs of the project?
  • What turnover, operating result, expected profit?

Design your BP as a financial marketing tool

Most business plans are frugal and do not invite in-depth study. Provide the form with understandable tab titles, a summary, a wording clear, a relevant color code… Two objectives: to show that you have clear ideas and to guide the reading. A clear BP is a clear project in the entrepreneur’s mind, it is the expression of his trustworthiness.

Prioritize ease of use, because a business plan with macros, a weight of 50 megabytes and 50 tabs, nobody reads. Some BPs need computer skills to open them! Only your board will take the time (and more!).

Ban all “hard” files – and, “as much as possible the assumptions in the hard, not linked” , notes Romain Dehaussy. Investors must play with the assumptions to take ownership of the plan and do crash tests to substantiate their investment thesis. It is crucial that the assumptions can be easily changed and that the aggregates that depend on them are clearly identifiable. It is not so much the result that interests investors as the way to achieve it.

Structure the document so that it can be read on multiple levels. The target groups differ within a fund. Determine an appropriate reading level for each of them. For example, consider a summary tab with charts for commission partners that don’t go into the details of expense and payroll.

Justify your main assumptions and don’t overdo it

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

Remember that too many assumptions destroy assumptions. Some BPs contain dozens of tabs with hypotheses, simulations in all directions, and a comparison of all the micro aspects of your business. We’ll forgive you the shortcuts to modeling your rent once the sales and margin actions are well documented and credible.

Make sure blood pressure matches the vision outlined in the slideshow

Your BP is the calculated version of the slide deck, a document that outlines your vision, your fundraising goals, and your action plans to achieve those goals. The BP must address these actions by detailing them and positioning them in time to show the spending of the amounts to be raised.

Arm yourself with business plan software, if it can be useful to you

You are starting your business and even if preparing the business plan is an essential step in structuring your project, certain tasks can prove to be extremely time consuming. As Romain Dehaussy points out: “never seen an entrepreneur use it” many sites and software allow you to relieve yourself of elements such as the financial forecast, business plan formatting, etc.

How do you choose a good tool? Check if the software allows you to forecast for five years – with a monthly payment for the first year – and adjust everything. The display must be clear and professional, but also secure so as not to risk having your data transferred.

What tools are available? Check out The Business Plan Shop, Enloop, Izypitch, CreateMonBusinessPlan.fr, Mon Business Plan, StartMyStory, Forekasts (formerly Evaltonbiz), etc.

Do you want to start your business? Find the latest resources and tools to help you on your entrepreneurial journey 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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