Business plan
Before you start
Vision, mission statement and business idea
Marketing
Further advice
The different sections of the business plan
Before you start
You are contemplating starting your own business. In that case, there are a number of considerations to be made before the enterprise is a reality.
Imagine you are about to start on a sailing trip and there are many islands and rocks in the area. If so, it is vital that you know where you are, where your destination is and how to navigate to get there. Also, you must consider what equipment you need for the trip.
In the business community such “travel documents” are denoted a business plan. Thus, the business plan is a document that describes your business idea and how you intend to run your business.The Business Plan outlines the business idea and how to achieve your goals
All experienced entrepreneurs agree that the process leading up to as well as the actual writing of the business plan is the best method to reach a decision on actual starting up, and to succeed if she does. The plan is your tool in dialogue with banks, investors, cooperation partners and possibly public support organizations such as Innovation Norway. The plan includes all that is necessary for others to decide if it is worth while to support your activities towards your own enterprise. Do not copy from others. This is your plan, – your ideas should be reflected.
Note that the business plan in essence is a prediction or a simulation that reveals elements / aspects that helps you decide if starting a business is right for you. And in the critical, early days when the business is established, the plan will reduce the risk for failure.
Do not make the plan more voluminous or complex than necessary. However, the business plan must, with respect to contents and layout, be a high quality product. If presented to a financial institution, Innovation Norway or others, the executive officer will notice if the plan is thoroughly prepared and realistic, if all parts hang together, if you have covered all aspects, if the market analysis is realistic, if your budgets are correct – and finally, if the plan’s layout and design are attractive.
There is no denying that writing a comprehensive business plan is a challenging exercise. We will recommend that you invest considerable time and effort in making it as accurate as possible. The reward is a document that gives you necessary insight both in the business idea itself and the potential in the market place.
Furthermore, we strongly recommend that you write the plan yourself. It is tempting to engage professional consultants for the job, but the plan should be your achievement, reflect your aspirations and give your points of view. However, if you need professional advice on certain aspects, e.g. the product’s market potential, patents etc., don’t hesitate to seek assistance. In fact, it may prove productive to have someone to talk to during the process, – someone to test your ideas on, who is willing to provide friendly advice and criticism.
Vision, mission statement and business idea
The vision is a short, succinct and preferably inspiring statement about what the enterprise intends to achieve at some time in the future, often often stated in competitive terms. For instance, the vision of General Electric is «We bring good things to life». The mission statement is the vision translated into written form.
We will argue that for the majority of companies, having vision and mission statements changes nothing. The value is limited, unless the company owners, management and executives live the vision, are seen to live the vision and constantly communicates the vision to the employees.
However, what you do need is a clear, well defined business idea, i.e. a statement telling what you intend to do (your products/services) and where too do it (your marketplace).
Marketing
The key to marketing is understanding your customers. You must be able to profile your target customer and his/her likes and dislikes accurately. This will help you understand how to position the product in the marketplace and how to price the product. You should also be aware of how your customer base is likely to change over time, whether it is declining or growing.
Do your planning properly: Collect facts, analyse the data, make some strategic decisions about the market and express your goals. Also, express how you intend to reach these goals. An analytic approach is to do a realistic SWOT (strengths, weaknesses, opportunities and threats) analysis of each market segment and/or product. You will probably experience that the final plan requires a fair amount of iteration. You are likely to detect areas of concern that influence earlier decisions, thus having to go back and make amendments.
Further advice
Write correctly! Use a language that is easily understood and have someone proof reading the plan. If you have to include difficult or not commonly used terms, explain the meaning, for instance in footnotes.
Make sure the business plan is
Do not include too many details. Detailed market analyses, budgets etc. may be given as appendices.
Refer to sources and documentation where relevant. This is particularly important when you argue the market and economic potentials.
The different sections of the business plan
For your benefit, we have published a business plan template (RTF format), guidelines to the template and budget plus cash flow calculation tools (MS
1. The Business Idea
Start by describing your business idea, the products and/or services you intend to offer and the market needs that will be satisfied. Next proceed to the basic information relevant for your business.
2. Personal Information
If you have an up to date curriculum vitae, it may replace some of the details in the section. However, it is very important to include information on the expertise, knowledge and experience possessed by you and/or people in your network that will enable you to start and run the enterprise.
3. Products/Services
Describe the products and/or services your enterprise will offer. Try to focus on and describe as accurately as possible the product’s unique properties.
How to produce or manufacture the product? If you are going to sell services, describe the essence of the service and how it will be produced. If someone is going to assist you in the delivery of the service, this should be included in the business plan.
Are you producing all parts of the service yourself, or will all or parts of the production be handled by others? Make sure to describe accurately what
4. The Market
Description of the market and potential customers is an important part of the business plan. Try to give short and concise answers to the questions in the business plan template (see below).
You should know the purchasing criteria of your customers. Purchasing criteria are the features the customers value when they select a provider of a certain type of product or service. Your ability to satisfy the most important criteria will determine if you are the chosen provider. You have to be at least as good as your competitors in satisfying the essential purchasing criteria. Such criteria may be design, functionality, the provider’s trustworthiness, service and follow up, personal relations, price, delivery time and accuracy, availability etc. Ask potential customers what they are looking for when they buy the type of product or service you are going to offer and evaluate your ability to satisfy these criteria compared to 2 – 3 of your most important competitors.
5. Marketing and Sales Activities
How to make the customers know you exist? By advertising, brochures, personal sale or other methods? You and your associates are important assets in the market approach. The more you know about your customers, the easier to direct the marketing activities precisely.
You should produce a market plan in order to describe how you will make you and your products/services known to the customers. A market plan is meant to serve as a statement on how much work and money you are willing to invest in order to:
• Influence potential customers to buy your product.
• Find partners in order to reach your customers.
We suggest that first you list what products and/or services you will offer and what market segments you want to attract. In section 9 of the before mentioned template, the two conditions are entered into a product/market matrix.
Next you list the actual market activities you have to apply to reach the different market segments. Enter the activities in an action plan (section 10 in the business plan template) and calculate how much resources you have to invest in these activities.
Also describe how you will sell your products/services, e.g. direct sale or through distributors.
