According to the most recent JLL Singapore research reports, Singapore is seeking to be the economic hub of Southeast Asia. With the city-state nurturing innovation and investing in startups, the next 5 years promise to be very beneficial for new businesses and employment. With that being said, there is also a huge focus on a startup business plan. Therefore, for those aspiring entrepreneurs who want to be a part of this new progressive economic change, here is some information that explains how to put together a business plan.
Purpose of Writing a Business Plan
Even though the research studies from Barclays show that most businesses do not have a business plan (statistics reflect 1 in 4 without plans), there are still many different advantages to writing one. Actually, if you want your business to succeed, you can increase your chances significantly by writing a business plan for your startup. Here are 3 of the primary reasons for placing these plans on your list of top priorities.
- The business plan is considered to be a proactive measure since it identifies potential threats, coping strategies, and keys for basic survival.
- These plans are usually an excellent measurement of how things are going and where the business should be by a certain time.
- When people read the business plan, it gives them an opportunity to see the company’s business idea, mission, vision, and financial requirements. So, it also helps to assist in securing a business loan or a financier to back the business.
Understanding the Different Types of Business Plans
Writing a business plan is a skill that you should master if you plan to start your own business in the future. The document will help entrepreneurs and financial institutions to understand your business model. If well written, you will get funding to support your operations. In addition, the business plan will be the blueprint of your business.
6 Primary Different Types of Business Plans in Singapore
Unknown to most entrepreneurs is that there are six different types of business plans. Let us briefly look at each of these business plans and how each is different from the other.
Start-Up Business Plan
As the name suggests, this is a business plan prepared by a new entrepreneur who intends to start a business. The document covers every detail of the company such as the location, market demographics, products, services, strengths, and weaknesses. When writing this kind of a business plan, you have to carry out an extensive market evaluation to ascertain that there is a gap in the market that your business will fill. You also need to have a project management team to help you implement the plan and ensure that the business succeed.
If presenting the plan to investors for funding, you will need to provide a financial analysis spreadsheet detailing various fundamental areas such as income, projected profit and cash flow. The information has to be accurate for the investors to be convinced that they can trust you with their money. The same case applies to banks, you will not get a loan if the financial analysis document is incomplete or inaccurate.
Internal Business Plan
An internal business plan is written for a specific audience within the company. For instance, the IT department that needs to evaluate the proposed new computer systems or machine learning software to help carry out data analysis.
The document will highlight the current state of the company in terms of profitability and operational costs. It also goes an extra mile to highlight how the company will get the capital to purchase the new software and repay on time. Some plans are detailed and explain the technical costs, the hiring process and project marketing.
If unsatisfied with the document, the head of department and other employees enjoined in the plan review will request for additional information such as demographics, current market size, and the positive effect that the new software will have on the revenue.
Strategic Business Plans
Unlike the start-up and internal business plans, the strategic business plan is meant to provide a high-level view of what the company’s objectives. It also highlights the specific steps that the company is going to take to achieve the goals.
Picture it as a foundational plan that will guide the company to more success. While different companies have varying structures, the five primary elements in the document are mission statement, business vision, clear definition of each success factor, strategies to be used to achieve the goals and the implementation schedule or plan.
Concisely, this document helps guide the company to the next level by highlighting all the levels of the business and inspiring the employees to work as a team to ensure that the goals are achieved. Its like a morale booster to help revamp the company.
Feasibility Business Plans
Feasibility business plans is meant to guide an existing company in the right direction by answering two questions namely;
- Who will purchase the product or service that the company intends to start selling?
- If the new venture is profitable
The business plan has to be detailed to convince the stakeholders that indeed the company should consider investing the resources available towards expansion. Since the product or service will be new, the stakeholders will need information on whether there is a ready demand for the aforementioned.
The target market and amount of capital that will be required for implementation should also be highlighted. At the end of the document, you are required to provide recommendations of the way forward to ensure that the plan does not fail.
Operations Business Plans
Just like the strategic business plan, the Operations Business Plan is an internal document that highlights specific elements of the company operations. The main objective of coming up with this kind of a plan is to ensure that the operations of the company are achieved on time. For example, the plan will specify the deadlines and markers for the next financial year. It also outlines all the responsibilities of the employees especially those who will be overseeing the tasks.
Growth Business Plans
Growth business plans are also referred to as expansion business plans. As the name suggests, the plan provides detailed descriptions of the proposed growth of the company. The plan can be prepared for both external and internal purposes. It is served internally if the people who will be working on the expansion project are already working in the company.
On the other hand, the plan can be written for external if there are third party stakeholders involved. For example, if the company requires funding to support the expansion, the business plan may be submitted to financial institutions. In that case, all details of the company such as management, employees, past success, plan for the future and any other information that would encourage the investors to provide funding will be included.
However, if the company does not need funding, you don’t need to go into details about the company, though you may be required to include the expense, sales projection and financial statements.
Choosing the Right Format for the Business Plan
Most people assume that their business plans will be a huge set of documents that contain lots of big words and complicated business terms that are difficult to read and understand. Quite the contrary, these plans are meant to be easy to read documents for everyday people. In fact, this information must be simple to review and understand by anyone who needs access to them in the future. Though these plans may consist of a diversity of facts and figures, the data that is written should only pertain to what’s really needed to operate the company smoothly, from the start to the finish. For instance, a business plan will answer questions like:
- How much money will be needed to buy equipment for the business?
- Where does the business owners expect the funding to come from when it is required?
Therefore, when a business plan is designed, it should be customized to that specific business. So, the best format should be written in a format that follows these basic guidelines:
1. Format that You will use Continuously
In a nutshell, the format that you should choose for your business plan is one that can be used on a day to day basis. On the other hand, there are also some formats that are highly discouraged. In particular, these are the formats that you will most likely put away in the file drawer or never refer to again. So, it really does not matter if the plan is presented in a format that can be posted on the wall, shown in a mind map or a visual guide. It’s simply the format that works best for you.
2. Format that Simple to Express Your Views
Some people like to write, and they can design a format that allows them to be creative. If this is the case, you can write a plan in a form that excites and inspires you. Whatever the case or situation, this is a working document that helps you to keep the business on track.
3. Format must be Shareable
When writing your business plan, you should also keep others in mind. Specifically, if you are depending on securing funding from sources outside of the company or your scope of responsibilities. For instance, if you are planning on securing funding from an investor, the investor will need to see your business plan.
What to Include in the Company’s Business Plan
Though all business plans are not the same, there are some common elements that should be included in almost every plan that is written. Some of the more notable are provided for you below.
Overview of the Business
The overall is used to give a brief description or explanation of what the company will do and how it will be distinctive from others in the same or similar industry.
What the company expects to achieve within a certain period of time.
Marketing Plans for the Start-up and Its Projections for the Future
Today, the business plan should outline how they will target their customers and what type of marketing campaign that they will deploy. For instance, digital marketing campaigns are very effective in ensuring the business takes off in the right direction. The beginning of these campaigns normally starts with designing a website, optimizing the site with the best SEO and SEM techniques and strategies, and launching a social media campaign that focuses on building the company’s brand.
Where to Seek Help for the Business Plan
Unless you have designed and documented a business plan before, you will most likely need help to start the process and complete it accurately. Fortunately, this is not a process that has to be tackled and completed alone. As a general rule of thumb, there are also common resources that you may want to reach out to in order to make sure that your document will be exactly what you are looking for. Here are a few resources that can help you to put it all together.
- An accountant can assist you with getting through the financials
- Small business experts can be contacted via a local bank institution
- Business plan templates can be found for free online
Expert Tips for Writing A Strong Business Plan
Now that you know the six different business plans, the next thing that we need to discuss is how to write one well. The plan should be strong enough to convince the investors that they should invest in the company. If its an internal plan, it should be accurate and enough to convince the employees that they should work towards the set objectives.
Here are tips on how to write a strong business plan.
1. Understand your Competition
When writing a business plan to encourage investors to fund the company, you need to have a clear understanding of the competition. Be prepared to not only mention them by name but also offer in-depth information about their current position in the market.
More importantly, you need to tell the investors why your business plan is better than them. However, as you do that, be careful not to disparage your competition.
2. Get to Know your Target Audience
Understanding your target audience is important if you are to come up with a feasible business plan. Remember that this are the customers who will be purchasing your product or using your services. You may also have to prepare different plans if you intend to approach banks, individual investors, and venture capitalists.
The main reason why you may have to write different plans is because each investor that you approach will have different needs. For example, the individual investors will need to know how you are going to repay the money and the portion of the company that you will give them.
3. Back-Up Every Claim
As mentioned earlier, one of the main reasons why business plans are rejected is due to inclusion of false or inaccurate information. If your projection is to become the first company to operate in a particular way, you will need to convince the investors how you will become a leader. Be specific about the timeframe and explain why you settled on it.
If you mention you will manage to be the authority provider of tree care services in the next six months, indicate how you are going to achieve that goal. If your business plan is about a new product that will take the market by storm, you have to provide information on how you will do it.
Concisely, every statement should be supported facts that you collected when doing market analysis. If it’s a strategic business plan, you need to show that the management team is qualified and capable of ensuring that the project is completed within the given timeframe.
4. Financial Projections and Estimates Should be Conservative
Financial projections and estimates get a lot of attention and criticism especially if you are launching a new product or the company does not have any track record. If you are sure that you will dominate 60% of the market within the first year of doing business, go ahead and indicate that in the plan.
However, if you are not sure, you would rather be conservative and give a percentage. For instance, if you are venturing into a competitive market and you are confident that the product will garner traction, say “My company will manage to capture at least 10% of the market share within the first 6 months.” You get the point, right?
Either way, be prepared to support your claim or projection with facts. You could mention that during your research, you realized that the main competitors don’t have robust digital marketing strategies. You intend to hire a full-service agency such as MediaOne Marketing to help you create a responsive website, create social media marketing campaigns as well as email marketing. Since the agency is credible, you stand a better chance of getting your plan approved and getting the funding you need to actualise your plan.
5. Be Realistic and Real
One of the common mistakes that entrepreneurs make when writing business plans is to exaggerate instead of sticking to the facts. When planning to introduce a new product that is different from the competitors, you have to make sure that you consider the unique selling points. Even so, you cannot afford to go overboard, otherwise, the investors will question your ability to enter the market and dominate within such a short period of time.
If you are writing an internal business plan and you are an employee of a big company, and propose that the operations of the company will be better if you manage everything, the management team will not be convinced that you can handle all tasks.
Being overly optimistic with resources and time will do you more harm than good. Strive to remain as realistic as possible to show you are credible and worth of guiding the company in the right direction. The rule of the thumb is assuming that any new project or recommendation with take or require at least 15% more time or more resources to complete. So, if you expect the project to be completed in 100 days, indicate 115 days in your business plan.
By doing so, if you manage to complete the project in 100 days, you will have shown the stakeholders that you have the skills and expertise required to get the job done. Otherwise, if you stretch yourself too thin, you will compromise your performance and in the long run your credibility.
6. Put Together a Management Team
The management team will be instrumental in helping you stay on course. You will not have to do everything yourself, some of the tasks such as finance can be delegated to the accountant or financial advisor in the team.
When forming this group, make sure that you put into considerations the members expertise and credentials. If you are not confident about the skills but still feel you should still have them in your team, consider bring on board an advisory team of experts who are skilled in the fields. Make sure that you attach their resumes when going to meet with the investors.
7. Provide Investors with Details About the Payout
Investors need to know how you are going to repay back their money and dividends. Some of the investors may present names of associates that they want added to your board of directors to ensure that their interests are considered in the decision-making process.
Briefly describe the payout options but if you are not sure mention that you are open to a discussion about it.
Writing a business for a startup in Singapore can be a challenging experience. However, if you understand its overall purpose, how to choose the correct format, and what these plans should entail, you can be successful in completing it properly. Make sure that you follow all the writing tips and hacks highlighted to increase your chances of getting funding from investors. If its an internal business plan, involve other employees in the research and writing process. Also, if you need additional assistance, you may want to reach out to other professionals in the industry to complete this plan accurately.