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11 sections to the perfect business plan – part 3

September 21st, 2017 Posted by alastair, blog 0 comments on “11 sections to the perfect business plan – part 3”

written by alastair barlow [blog]

this is the follow on article from 11 sections to the perfect business plan – part 1 & part 2 where I describe these sections in detail; business strategy, finances and risks.

across the 3 articles I cover the following key business plan sections:

  • executive summary (part 1)
  • industry (part 1)
  • market (part 1)
  • product/service (part 1)
  • branding (part 2)
  • customer & marketing (part 2)
  • operations (part 2)
  • management (part 2)
  • business strategy (part 3)
  • finances (part 3)
  • risks (part 3)

business strategy

if an investor gets to this part of the business plan you’re doing better than 9 out of 10 businesses! you now need to bring it all together and describe what you will do with the investment you are looking for and more importantly how you will execute it. it’s no good simply saying you will increase revenue by 25%, you need to explain how you will do that.

do you intend to move into new markets, new geographies, buy the competition, acquire new customers through marketing? whatever your overall strategy for growth, you need to make it very clear to an investor (and it helps to solidify plans within a management team). I would also suggest you implement a timeline on how you will deploy this strategy which adds credibility to your overall plan.

it’s critical, as with the entire plan, that your strategy is consistent with everything else you have described in the business plan, including and most importantly your financial forecasts which we will look at in the next section.

key points to include in your business strategy section:

  1. make sure everything else you’ve written about ties together in this section
  2. include a timeline of how you will execute that strategy with key milestones
  3. outline the strategy in respect to: staffing, product development and testing, supply chain, marketing, selling and accounting


whether you’re preparing the plan for an investor or for yourselves, you absolutely need to include financial forecasts within it. there are plenty of profitable businesses that have gone out of business because they have not been on top of their finances. this can be especially true in a fast-growing business that overtrades (grows at a pace that working capital cannot keep up with). because of the sheer volume that needs to go into a forecast, I will look at this in more detail in a separate post but I will give a few pointers where I see businesses go wrong.

whether your forecasts are for an investor or management, it needs to be an integrated forecast; that is a profit and loss, balance sheet and cashflow forecast. too often I see only a cashflow forecast or a profit and loss forecast – all three should be included and they should be integrated or interconnected with one another! why? because without them being integrated there is no forced relationship between sales and debtors, purchases and creditors, and cash. investors lack confidence when they see only one side of the equation.

your forecasts should be realistic and sensible. for example, if you are forecasting huge growth and output, has your forecast taken into account you need the staff to do this? or the marketing costs to get there? or the office space to support it? as hard as it is, stand back from the projections or ask someone else to review them cold to make sure they make sense. I’ve seen too many forecasts prepared from the ground up which, when looking at them holistically, make no sense at all!

my other tip would be to include your assumptions as part of your forecast – every key assumption such as inflation, exchange rates (if relevant), debtor days, creditor days, number of staff, vat & tax rates, staff salaries, sales prices, margin, number of customers/clients, purchase prices, cac, ltv etc. I can’t even count the number of forecasts I have seen where it’s near impossible to unpick what the assumptions are! without assumptions to support a forecast, it’s meaningless numbers made up! and let’s face it, anyone can make up good numbers.

remember, you are trying to make it easy for someone to say yes and give you money! don’t make it hard for them if they have no clue how your sales are growing or what your debtor days are – it’s much easier for them to say no. don’t give them a reason to.

key points to include in your finances section:

  1. include an integrated profit & loss, balance sheet and cashflow forecast
  2. outline the assumptions in the forecasts and refer to external market data where relevant
  3. include historic numbers as a starting reference point
  4. create a detailed 12 month plan and at least a 3 year high level plan
  5. show a high, low and medium point of sensitivity and what those key sensitivities are
  6. get someone to check your forecasts – it’s so easy to get lost in the weeds!


while we’re on the subject of lenders saying no, lending is a risky business. being in business is a risky business. identifying your own risks and how to mitigate them is something I don’t see enough in business plans or from business leaders. any good management team will already have thought about the risks and challenges of meeting the objectives set out in the plan. any decent investor will already have come up with most of the risks before they have finished reading your plan (or even started reading it), so help them out and show them as a strong management team, you have also thought of the risks and how to mitigate them.

like the content and depth of the wider business plan, the level of detail you need to go into for the risks section depends on the amount of funding you need and the purpose of it. for a full-blown business plan, I would break the risks down by business functions or areas of the business plan – that will help to identify them or categorise them in a complete way. then give them a weighting as to their likelihood, along with a risk mitigation and an impact weighting, you can see in the example below.

while clearly there has to be a viable business, market and industry for someone to invest into your business, and the financials have to work. identifying the risks and mitigation will go a long way to giving an investor a good feeling about you and your team’s ability to convert the plan into reality.

key points to include in your risks section:

  1. identify risks by business function or business plan section
  2. describe your proposed mitigation of each of the risks
  3. apply a weighting of likelihood and of impact to each of them

polish your business plan off by making it look good. we all know the saying, you shouldn’t judge a book by its cover, but first impressions do count. if it doesn’t look great then what sort of impression do you think it gives off? I’ve seen so many business plans that could have been good, but I’ve been put off just by the look and feel of them – Excel graphs copied and pasted really don’t cut it.

most importantly, once you’ve prepared your business plan, actually use it! use it within your company as a reference point on a periodic basis.

thanks for reading – if you have any comments or questions on the above, or are interested in talking to us, please get in touch.