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A good business plan guides you through each step of setting up and managing your business. It can help you find a new direction for your business or test the financial viability of your idea. Every business is different, and therefore you should tailor your plan to your needs and audience. However, no matter how small your venture is, your plan should include at a minimum key strategy points, crucial milestones and essential projections, sales, spending and cash flow analysis. You should prioritise substance, and leave out any empty gimmicks, or unrealistic financial projections or milestones. This article shares some tips and best practices to help you write a thorough and accurate plan for a New Zealand business and win investors and other stakeholders. 

What Is a Business Plan?

A business plan is a crucial document for your business. You should not start running your operations without a business plan as this will help you avoid common causes of failure, such as not having enough capital or an adequate market. Your business plan should explain: 

  • the nature of your business;
  • details of your offering, target market and competition;
  • sales and profits forecasts;
  • how much capital you require for startup or expansion and how you are planning to use it; 
  • your legal business structure, ownership details and key personnel; and
  • whether you have obtained any patents, prototypes, essential contracts regarding product development, or conducted any marketing tests.

If you are putting together a plan for the first time, it is essential to understand how to write and present your content effectively. You want to engage your readers early in the process, and be able to communicate succinctly what you need and why. For example, do you need a loan to buy new equipment, how will you repay this loan and over what term. 

Keep It Relevant 

As with most content that you will produce throughout the life of your business, you need to write for your audience and therefore understand their needs. Your business plan’s target audience may include your potential investors, lenders, potential partners, employees, customers and suppliers. 

For example, if you are writing a version of your business plan for a venture capitalist (VC) firm, you want to be concise, clear and convincing. VC investors are often busy, so your plan is likely only to get a few minutes of their attention. You may want to use some visual representations of your data for impact, such as charts and graphs. If you are writing for an angel investor, prepare a brief, less formal plan to avoid sounding imposing. They are generally more informal and tend to trust their instincts over your pitch. Think like an investor, and write what they would want to see.

Keep It Concise – And Nail Your Pitch! 

When it comes to length, your business plan should be as long as it takes to convince your readers that you truly understand your market and have a strong execution strategy in place. However, most business consultants agree on a minimum of 15 pages, and it should not take longer than 15 minutes to skim through. 

Your plan should start with a one-page pitch that summarises your business, the problem that you are solving, your target market, and financial highlights. A concise and punchy summary can help you get the attention of your reader early on in the document and spike their interest in your business.

Tip: The New Zealand business.govt.nz website provides a free business plan template. Make sure you tailor it to the needs of your business and audience and ask a consultant or mentor to review it before you present it to your investors.

Do Not Make Empty Claims 

Some of your stakeholders, such as investors, read thousands of business plans and can easily recognise empty claims and gimmicks. If you state that your product has the potential to get 10% of the market in a specific timeframe, you have to support your assertion with carefully analysed data. Otherwise, you will find it hard to get any investment. For example, you should provide evidence of your customers’ acceptance for your product or service, and the rate at which you can likely sell it.

Be Conservative 

When making financial projections and forecasts in your business plan, you should be conservative and realistic. You should include five-year forecasts of profitability to help your investors decide how much they want to commit and at what price. You should avoid relying on over-optimistic figures, as investors can quickly see through these. If you need help to prepare your financial forecasts and present them in a standard format, talk to your accountant. 

You should also be conservative when defining milestones. Being realistic will make your presentation more credible. Before you start, do your research and add a 15%  buffer to your key milestones to avoid missing important deadlines.  

Include Payout Options for Investors

Your investors need to feel comfortable that they can make an adequate return, or when and how they could cash out. As a general rule of thumb, many investors want to get their money back within three to seven years. Therefore, you should provide a brief description of your plans to pay them out.

Key Takeaways 

Your marketing, operational and financial issues are unique to your business. Therefore, your plan should be tailored to your business needs and focus on areas of concern to your audience. Your investors rely on your plan to understand your business objectives and the capabilities of your management team and determine whether they can earn an adequate return for their investment. Therefore, to win your investors and other stakeholders, you should keep your business plan relevant, concise, realistic and conservative. 

If you need help to define your business’s regulatory environment or to review your business plan before presenting it to investors, LegalVision’s business lawyers can help. Call 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is the basic structure of a business plan?

Your plan should start with an executive summary that summarises your business, the problem that you are solving, your target market, and financial highlights. Think of it as a one-page pitch that will help your audience decide whether they want to continue reading or not. You should then go into more detail about your business, strategy, current and planned team, market and competitor analysis, strategy and budget, assets, financial plan, business continuity plan and legal and regulatory requirements. As a rule of thumb, your plan should not take longer than fifteen minutes to skim through.

What is the purpose of a business plan?

You will use your business plan to test the commercial viability of your idea or to plan the next stage for your business. It will help you decide how much capital you need to fund your venture and whether you want to get funding from investors or a loan from a bank. Your plan can also help you attract talent for your management team or secure a deal with a new supplier.

What should not be included in your business plan?

Your business plan should not include empty promises or over-optimistic projections or timelines. Your investors read through dozens of business plans a day so they can quickly spot when you are not being truthful or realistic.

Who is a business plan written for?

From financing your operations to attracting talent, you will write your business plan to help you define and meet your goals. Therefore, your target audience will include investors, lenders, potential partners, employees, customers and suppliers.

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