A Business Plan Guide for Entrepreneurs

Date: 21 October 2013

Prepared by: Mark Thomas


Executive Summary

The business plan is an essential tool for all businesses. It is the clarity of your thoughts and research into the business you wish to undertake. It is more than a plan though. A well-prepared business plan is; the primary document used by potential investors to determine if they will financially support your business; your benchmark for your implementation; and a guide for how and where your business will evolve. Accept that the plan will have its limitations because rarely will reality match your expectations.


The business plan is the guidebook that defines your business without limiting innovation and evolution. It is not a holy book that must be followed strictly, which would strangle innovation. Neither is it a living document that constantly changes.

Realise that the business plan will have its shortcomings because events will unfold differently to what was envisaged. These shortcomings are not weaknesses with the business plan, per se. Rather, they are to be expected. However, the better the plan, the lesser will be the impact of its shortcomings.

Your business plan has four purposes:

  • Decision tool. By conducting research and documenting your thoughts and plans you can objectively determine whether or not to proceed with your venture;
  • Funding tool. Seed investors will use your business plan to determine whether or not to invest in your business;
  • Business guidebook. A well thought-out business plan will guide you when you need to determine which opportunities you will follow and which you will reject; and
  • Business benchmark. It will enable you to monitor your progress and ensure there is accountability for your achievements and missteps and that you learn from both.

The advice I give to clients is to; spend enough time to prepare an appropriate business plan; review it twice annually to benchmark progress and to assess where and why there is deviation from the plan; and to update it with the benefit of experience.


At its most basic the business plan has five sections, with additional sections and sub-sections incorporated as required. These five sections are:

  • Executive Summary;
  • Business description;
  • Production;
  • Distribution; and
  • Financials.

Executive Summary

A concise description, usually in dot-point format, of:

  • The vision for the business and its history;
  • How it is going to be structured;
  • What you are going to produce;
  • How you are going to produce it;
  • The market, its structure, and expected growth;
  • Potential customers;
  • Distribution strategy, including pricing strategy;
  • Your competitive advantage and how you will exploit it;
  • The market share you expect to achieve over period(s);
  • Resource requirements, including a summary of the team and its structure;
  • Critical risks and how they will be managed;
  • Estimated gross and net margin;
  • A profit & loss statement for the current and forecast period(s);
  • A statement of the capital requirement of the business, how it will be sourced, and how it will be used;
  • Payback period; and
  • Expected return on capital.

The Business

A description of:

  • The concept of the business, its history and evolution;
  • The industry the business is entering;
  • The product, including a summary of your unique competitive advantage and how you will exploit it;
  • Business model to be employed and a comparative business that uses this model;
  • Whether or not this endeavour has been attempted before; its success or failure; reasons for the success or failure; the lessons learnt; and how you are going to; capitalise on the success, or avoid the failure;
  • The business structure. Is it a company or are you a sole trader, partnership, or trust; and why you have adopted this structure;
  • If you are a company:
    • Whether you are private or public;
    • Board composition;
    • Whether the directors are family members or independent;
  • If you are not a company:
    • Your trading name;
    • How you will protect/register your trading name.
  • Your brand and how you will protect it;
  • Resource requirements; production inputs, employees, facilities;
  • Organisation chart;
  • Key personnel and how they will be enticed to join and be retained;
  • Employee compensation strategy;
  • Professional advisors and services, if any are required;
  • Insurance requirements;
  • Regulatory and legal considerations and how they will be managed;
  • Critical risks, including any perceived fatal flaw, and how they will be managed;
  • Funding sources and Investors; and
  • Schedule illustrating the key milestones from inception to business success.


For each product provide a detailed description of:

  • The product, including:
    • Its use;
    • Its unique features; how these features make your product superior to your competitors; how these features will benefit your clients; and why your competitors will not be able to replicate these; and how you will capitalise on these unique features;
    • Any negative features of your product or possible drawbacks and how they will be managed;
    • The status of the product (ie concept, prototype, full scale production);
    • How your product is going to be produced; and the ability to scale production effectively;
  • Licensing, patents, trademarks;
  • Production inputs; capital, equipment, labour, materials;
  • Suppliers and their geographical location;
  • Facilities and their geographical location;
  • Exposure to factors outside of your control;
  • Seasonality, if applicable;
  • Production costs and exposure to cost increases;
  • Potential risks to production; and
  • Product development plans.


For each product a detailed description of:

  • The market you are entering. Include an analysis of:
    • The size of the market and its growth potential and factors influencing growth;
    • The structure of the market, including any perceived gaps;
    • Market trends, including factors influencing the trends;
    • Competitors, including their perceived strengths and weaknesses;
    • Competitor leaders and laggards and why they are so;
    • Competitor financial position;
    • Competitor products and where they differ from your product;
    • Competitor market positioning;
    • Your market positioning and why you have chosen it;
    • Competitor distribution strategies; and
    • Your strengths and weaknesses against your competitors.
  • Customers; including:
    • Detailed description of your typical customer and your major customers;
    • Location of your customers;
    • Buying / spending habits;
    • Where this product fits in their spending pattern; and
    • The buying process and how decisions are made.
  • Your distribution strategy; including
    • Where you sit in the distribution chain;
    • Distribution method;
    • Pricing strategy;
    • Advertising and other promotional strategies. How are you going to get and maintain the attention of your potential customers? and
    • Resource requirements, including remuneration and incentive structures;
  • Your internet strategy and how this interplays with your distribution strategy;
  • Your servicing strategy. How are you going to get repeat business from your customers?
  • Your warranty policy;
  • Growth strategy, including 5 year growth projections. Link these back to your analysis of the market, your competitive advantage and your distribution strategy;
  • Operating cycle and distribution seasonality;
  • Costs of distribution, including marketing and shipping budgets; and
  • Critical risks and how they will be managed.


A detailed description of:

  • Gross and operating margin;
    • Overall and segmented by activity/distribution method;
  • Revenue projections;
  • Earnings projections;
  • Cost analysis:
    • Fixed;
    • Variable; and
    • Semi-variable;
  • Cost control;
  • Funding sources, funding costs and headroom;
  • Use of funds;
  • Breakeven period;
  • Cash flow projections and analysis including period to positive cash flow;
  • Balance sheet projections;
  • Earnings retention policy;
  • Critical risks and how they will be managed;
  • Return on equity projections; and
  • Sensitivity analysis.


For the business plan to be useful, it must be reviewed. Reviewing the business plan is almost as important as drafting it because it will help to maintain focus and provide a benchmark against which success may be measured. However, discovery is just as important as sticking to the path, so there is a necessary compromise between sticking to the plan and modifying the plan. Generally, this balance is achieved through twice yearly reviews of the business plan. Reviews that occur more frequently result in the plan stifling creativity and less frequent reviews reduce accountability and focus.

Preparation Time

Depending upon the complexity of the business an adequate business plan for a new business can take from 20 hours to 300 hours to prepare. Most entrepreneurs should expect to spend at least 50 hours preparing the plan for a new venture. In the case of a review, the business leader should expect to spend half the time taken to prepare the original plan because much is already known.


The business plan is a valuable tool for all businesses, because without it your business lacks direction and there is no accountability. Accept that it has its shortcomings and use it as a guide to how you wish to build your business. As your business develops so too will your plan. For more insights on developing your business contact us at This email address is being protected from spambots. You need JavaScript enabled to view it..


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About the Author

Mark Thomas, SF Fin, MHKSI, MAppFin, GDipFinPlanning, GradDipAppFin, BE. Since the 1990's, Mark has built businesses and careers. More recently, Mark has actively pursued opportunities to help businesses and individuals to gain focus, communicate their message, and achieve their goals. Mark's current area of focus is developing newly established firms and firms that have had better times. In his career, Mark has worked in many roles, including; futures trader, portfolio manager, relationship management, and more recently business leadership. Prior to entering the finance industry Mark enjoyed a career as a Chemical Engineer. Mark is a regular speaker at industry events, a lecturer, a mentor, and is actively involved with several industry bodies.