How to Write a Business Plan
Writing a business plan will help you set targets, plan for the future and make sure that your business idea is realistic. It is also an essential tool to help you attract the funding you need to get started.
In this guide, we take a look at what a good business plan should include. We will also take you through how to write your plan and why it’s so important.
Why should you write a business plan?
A business plan will help you:
- Bring together and organise all your ideas and research.
- Decide whether or when the business will be commercially viable.
- Predict future pitfalls and work out how to avoid them.
- Set out the business strategy, particularly the marketing strategy.
- Set goals, including sales and financial targets.
Your business plan should be easy to read, covering all the necessary information without being too long or contradicting itself. If you are going to use the plan to raise finance, it will need to be realistic and convince investors that the business can be successful. You’ll also want your plan to stand out from the many others that investors receive.
What should you include in your plan?
Every business and situation will be different, but the following headings cover the essential elements that you should include.
Table of contents
Your plan should first include a table of contents listing the main sections and page numbers.
This should be a one or two page summary of the rest of your plan. It is the first thing that an investor will read, so it must be clear, engaging and to-the-point.
Typically, the summary will answer the following questions:
- What makes your business idea unique or original?
- What experience do you have that will make a funder confident that you are capable of making it succeed?
- Has your plan shown that your business is going to stack up financially and be viable and profitable?
- How and when will a grant or loan provider get their money back?
The executive summary should also include:
- The trading name of your business, its owners and its address.
- The products and services provided.
- An overview of the target market and competition.
- The amount of finance needed, for what purpose and over what term.
- The amount of money the business owners are investing.
Aims, objectives and vision
Investors will want to know about your motivations and how your business might develop. Defining the vision for your business will help with the identification of clear and challenging objectives, and determine how you will pursue these goals as the business grows and changes.
Business description and purpose
What exactly will your business do? Your plan should be as specific as possible about the type of business you are starting.
Think about how your products and services will differ from those offered by competitors. Why should customers want to use them? How will you make the business stand out successfully?
It’s best to write your business description like a mission statement. It should give a clear summary of the purpose of the business and be easily understood by owners, staff, customers and potential investors.
Legal structure and licences
Your plan should set out your chosen legal structure. For example, will you be operating as a sole trader or partnership, or will you be setting up a limited company or social enterprise? It’s essential to select the most appropriate legal structure to meet future needs.
In some cases, you may need one or more licences before you start trading, or your business premises may need planning permission, building regulations approval, or permissions from your landlord or mortgage provider. Your plan should provide evidence that you have worked out exactly what licences, permissions and approvals you need and that you either have these already or are taking the necessary steps to get them.
Being organised from the start will make your business more efficient and ultimately more enjoyable to run. Even where there is only one person involved, it is still worth looking at the critical management skills and processes that you will need to run your business effectively.
Your plan will need to consider how you will manage:
- Marketing and sales.
- Recruitment and staffing.
- Product development or product sourcing.
- Legal compliance.
Your plan should demonstrate a clear understanding of your market. You should consider its size and location, your target customers and their profiles, potential competitors, trends and influencing factors.
Once you have a clear marketing strategy, you need to set out how you will bring it into effect and who will make this happen. A detailed marketing plan should explain how you will achieve each of the marketing targets and objectives defined in the marketing strategy.
Sales targets and objectives
The purpose of your marketing plan is to help you meet the most important business goal of all: the sales revenue targets. Think about your prospecting strategy, your sales goals and sales channels.
Current financial requirements and financial forecasts
How much money does your business need now, and for what purpose? Your business plan should include a breakdown of financial requirements, the sources of finance that are available and any additional finance that may be needed.
- The cost of starting the business.
- The personal budget of the business owners.
- Details about the personal finances you intend to invest.
- Details about any additional finance you have secured.
- A table showing how you will spend the finance.
- A detailed cash flow forecast.
- A profit-and-loss forecast.
- A balance sheet forecast.
How will you put your plan into action? In other words, what are the ‘operational requirements’ of the business?
Details about operational requirements will be essential when preparing financial forecasts. Basic operational planning should cover the following aspects of the business and include an estimate of their costs:
Your business plan should include details of any relevant training courses you have attended and any training that you will need to complete in the future.
What could go wrong, and what would you need to do if the worst happens? Your plan should include an honest assessment of the risks involved in the business, as well as how you will minimise them.
You should consider and plan for all possible outcomes. Investors will need to see that your plan is not overly optimistic and that you have recognised the realities and risks of the situation.
A ‘strengths, weaknesses, opportunities and threats’ (SWOT) analysis helps to achieve a focus on the internal strengths and weaknesses of your business, including those of the owners, staff, products/services and processes. At the same time, it also enables examination of external opportunities and threats that impact on your business, such as market and consumer trends.
Appendices should include all the documents that support your plan, for example:
- Your CV and those of the business owner(s), operators and key employees.
- Certificates for any qualifications or relevant training courses.
- Copies of the lease for any rented business premises.
- Market research data.
- Financial forecasts.
- Details of any professional advisers, key suppliers or insurance providers that have been engaged with, if applicable.
DISCLAIMER While all reasonable efforts have been made, the publisher makes no warranties that this information is accurate and up-to-date and will not be responsible for any errors or omissions in the information nor any consequences of any errors or omissions. Professional advice should be sought where appropriate.
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