Every accountant must know how to write a business plan to support a business owner. Why?
Every business needs a business plan.
Unfortunately, many business plans are wildly unrealistic. The initial excitement of starting the business often causes entrepreneurs to massively overestimate how successful they’ll be and underestimate the challenges they’ll encounter.
The first section of any business plan will be the executive summary. It gives people a general sense of what your business is all about, what products or services you provide, where you’ve been, and where you’re headed.
The Small Business Administration recommends that your business plan contains the following six things at a minimum:
Think of the executive summary like a detailed elevator pitch. It highlights the most important points of your business plan without going into all the details.
You may want to consider writing your executive summary after you’ve written the rest of your business plan. That way, you’re more familiar with all the relevant information.
This section provides more detail regarding exactly what your business does and how it’s structured. You can start by explaining:
Essentially, you’re explaining the reason for your business’s existence. You’re identifying a specific customer need in a specific market and then clarifying exactly how you’ll meet that need.
The overview section functions as your Unique Value Proposition. It clearly and concisely explains the unique value that your business offers. If you’re struggling with this section, try to answer the following questions:
The market analysis section of your business plan provides in-depth information about your industry, your specific market, and the competition. If this section is done properly, it assures readers that you know what you’re getting into.
In your market analysis, seek to include the following information:
This section will take a significant amount of research, but it’s time well spent. First and foremost, it prepares you to succeed. Second, it helps investors know that you’ve done your due diligence.
Next, describe how your business will be organized and structured. First, spell out the general structure of your business, both in organizational terms and in legal terms. Where does each key stakeholder fit into the big picture of your business (include an organizational chart).
In terms of legal setup, are you:
Next, describe the background of key members of your team. This part is especially important if you’re seeking funding. Investors want to know that you have experienced, successful individuals who can ensure that your business also succeeds.
Finally, describe any key hires that will be necessary. This may not be immediately relevant, especially if you’re just getting started, but it will matter much more as you grow and expand.
This section explains exactly what products or services your business will provide to customers. Start by describing your particular product or service and the specific need it will meet. It’s really important to clarify exactly how your product or service will stand apart from the competition.
Within this section, you should also discuss:
Make your product or service really shine in this section. It should be abundantly clear both to you and to the reader that you have something unique to offer and that you’re in a prime position to attract customers.
This section explains how you’re going to get your product or service into the hands of customers. Your objective in this section is to make clear both how you will make customers aware of your product or service and how you’ll convince them to buy from you.
The first element in your marketing plan needs to be positioning in relation to your competitors. Will you position yourself by offering:
Next, discuss the specific promotional methods you’ll use to get the word out about your product or service. Additionally, clarify the metrics you’ll use to evaluate whether your marketing efforts are working (leads generated, social media reach, website visitors)
After laying out your marketing plan, discuss your sales plan. What method will you use to convince customers to buy from you?
Next, talk about who will be doing the selling. If you need a sales force, who will train them and how big will the team be? Lastly, lay out the budget you have for both sales and marketing. This will help readers gauge the scope of your efforts and possibly estimate results.
In this section, paint a clear picture of your business’s current financial status, while also mapping out where you hope to be in the future. Investors will closely examine this section to determine whether they want to give you funding.
If you’ve been in business for a while, include as much past financial data as possible, including:
Your financial projections for the future will either be based on your past data or industry and competitor research (if you don’t have past data). If you’re not sure how to create these projections, consider hiring an accountant or financial advisor to help you.
In this section, you’ll lay out exactly how much funding you need over the coming five years. Explain how you’re going to use the funding to achieve your goals.
Include the following details in this section:
Additionally, explain how you will be using the funds. Will you be acquiring inventory? Paying down a debt? Hiring employees? It’s also critical to lay out your future financial plans so that investors have a good idea of what they’re getting into.
As much as possible, try to customize your funding request based on who you’re talking to. If you’re asking a bank, provide them with a repayment plan. If you’re asking an investor, give them an estimated ROI.
The last section of your business plan is the appendix. In the appendix, include supporting information and documents that substantiate what you’ve written in the previous sections. You may want to include:
In all the previous sections, you’re trying to paint a compelling picture of what your business is like and where it’s headed. You want to provide the reader with enough data to help them grasp your vision but not so much that you bog them down.
The appendix allows you to provide extra details to the reader without disrupting the overall experience. If the reader wants to look at these details, they can simply refer to the appendix.
An accountant that doesn't know how to write a business plan can't provide a business with proper support. It's a critical part of the job and one any acocuntant must invest their time in.