The proposal
The proposal is the heart of the business plan. It sets out:
- What you intend to do– this is an explicit statement describing
what you expect to achieve in quantified terms and how the
scale of your achievement will be measured. - When you are going to do it – the period of time covered by the
plan. This should be realistic. A plan extending for more than
five years is taking you too far ahead to be believable. Three
years or so is often a more acceptable timetable. - How you intend to do it – this is a description of your plan of
action specifying the sequence of steps you will take. - Why you believe you will be successful– this is an important
part of the proposal. The aim is to make a convincing case for
your plan based on what you will be offering to customers,
their likely response, an analysis of the competition and a
description of the resources you will be able to marshal when
implementing the plan. This case is reinforced by the later
sections of the plan covering finance, the market, operations,
management and personnel, control systems and risk assess-
ment. - What you need to finance the plan– this spells out how much
cash you will need and when you will need it. If applicable,
an indication is made of the amount of cash that you can
already make available and, therefore, how much more you
will need from an investor or investors. This should be a real-
istic sum – not too much and not too little. - The financial returns your plan will generate– this is a summary
statement of the returns an investor can anticipate from an
investment, which is expanded in the section on financial
projections.
Financial projections
Financial forecasts are required over the period of the plan, say
three years. They should state for each product or service group
the anticipated sales and the gross profit or margin (the differ-
ence between sales revenue and the cost of goods sold) year by
year. It is also helpful to include under the same headings a
summary of trading results, if applicable, over the past two or
How to Prepare a Business Plan 209