A compelling business plan must have the following:

• Executive summary
  
  
• Company background
  
  
• Products or services
  
  
• Market analysis summary
  
  
• Marketing
  
  
• Business operations
  
  
• Management team
  
  
• Financial projections

Executive summary
The most important section, the Executive Summary is best written last. It summarises your business plan and is placed at the front of the document.

You may want to spend more thought and time on this document to make sure that it will impress and convince the potential venture capital investor. Highlight the objectives, mission and key to success clearly. It should be written with a good balance of "sales talk" and briefly - not more than two pages.

Company background
Provide a summary of the fundamental nature of the company and its activities, history and objectives.

Products or services
Explain the company's product or service in plain English especially if it is a technical product or service for a non-specialist to be able to understand the plan.

• Emphasise on the product or service's unique selling point.
  
  
• Describe the stage of development of the product or service whether in seed, early stage, expansion or MBO stage.
  
  
• Explain what legal protection you have on the product, such as patents attained, pending or required.

Market analysis summary
You need to convince venture capitalists on the real commercial opportunity for the business and its products and services. Provide a clear description and analysis of each one of the products or services.

• Define your market and explain in what industry sector your company operates. What is the size of the whole market? What are the prospects for this market?
  
  
• How does your company fit within this market? Who are your competitors?
  
  
• Describe the distribution channels. Who are your customers?
  
  
• Explain the historic problems faced by the business and its products or services in the market. Address the current issues, concerns and risks affecting your business and the industry in which it operates.

Marketing
Outline how the prospective business will exploit these opportunities.

• Explain your sales and distribution strategy. What is your planned sales force? What are your strategies for different markets? What distribution channels are you planning to use and how do these compare with your competitors'? Identify overseas market access issues and how these will be resolved.
  
  
• What is your pricing strategy? How does this compare with your competitors'?
  
  
• What are your advertising, public relations and promotion plans?

Business operations
Explain how your business operates.

• How you make the products or provide the service, firstly in brief and then in more detail. What are the sources of raw materials? Who are your suppliers?
  
  
• What are the labour requirements? What is the company's approach to industrial relations?
  
  
• Outline your company's approach to research and development.

Management team
Demonstrate that the management team can turn the business plan into a reality.

• The senior management team should have a specific role with experience in the management strategy, finance and marketing areas. Include members' curriculum vitaes with information on their special skills and previous track record.
  
  
• Identify the current and potential skills gaps and explain how to fill them. Venture capital firms will sometimes assist in locating experienced managers where an important post is unfilled - provided they are convinced about the other aspects of your plan.
  
  
• Explain what controls, performance measures and remuneration for management, employees and others.
  
  
• List your auditors and other advisers.
  
  
• Include organisation chart.

Financial projections
Consider using an external accountant to verify the financial projections for your business such as:

• Realistically assess sales, costs (both fixed and variable), cash flow and working capital. Produce a pro-forma profit and loss statement and balance sheet. Assess your present and prospective future margins in detail, bearing in mind the potential impact of competition.
  
  
• Explain the research undertaken to support these assumptions.
  
  
• Demonstrate the company's growth prospects over, for example, a three- to five-year period.
  
  
• What is the value attributed to the company's net tangible assets?
  
  
• What is the level of gearing (i.e. debt to shareholders' funds ratio)? How much debt is secured on what assets and what is the current value of those assets?
  
  
• What are the costs associated with the business? Split sales costs (eg. communications to potential and current customers) from marketing costs (eg. research into potential sales areas). What are the sale prices or fee charging structures?
  
  
• What are your budgets for each area of your company's activities and how to keep within these or improve on these budgets?
  
  
• Present different scenarios for the financial projections of sales, costs and cash flow for both the short and long-terms.
  
  
• Keep the plan feasible. Avoid being overly optimistic. Highlight challenges and show how they will be met.

Present relevant historical financial performance as its historical achievements can offer help context and credibility to future projections.

Consider how the venture capital investors will exit the investment and make a return by floating the company on a stock exchange or selling the company to a trade buyer.

To see how to use these points in your plan, review our samples.