Put simply, a business plan is a document you put together yourself which explains everything about your business idea and what you intend to do during the first couple of years to get it off the ground.
Sometimes people only write a business plan when they need one to apply for a bank loan or other finance to help fund the business. However, starting a business is a big step and much can be gained from going through the process of writing your business plan – it really is worth taking the time to write one even if it is just for yourself to ensure you have thought about everything necessary. It is estimated that more than half of new businesses fail in the first year – often because they failed to budget properly, although writing a plan can help you foresee any possible problems you may face.
What’s in a business plan?
There are many templates to follow online – but most follow the same structure as follows:
- Executive Summary – the first thing readers and potential investors read, but it is best to leave writing this until last.
- Introduction and Company Overview
- Market and Competitors
- Sales and Marketing Strategy
- Financial Information
I will outline what to research and write about for each section, one at a time, leaving the first section until last as you will be in a better position to write the summary once everything has been thoroughly planned.
Let’s get started…
Introduction and Company Overview
Write about why you are starting this business and include any relevant background history which may have led to the idea for your business. Include details of anyone else who is involved. State what your goals are and what your Unique Selling Point (USP) is, describing the product or service that you will provide, how it will benefit your customers and why they will choose your company over any competitors offering the same thing or similar. Also include the business name and contact details, legal status and whether you have a website. If you have any patents or copyrights, write about these here.
Market and Competitors
Use this section to show that you understand the market/industry relevant to your business. For example, find out how big the market is believed to be or how many people could require the product, mention any relevant recent market trends and whether you think demand will change or remain the same in future. Describe who your customers are and where they look for this type of product or service. If relevant, talk about what those customers want/need – gain insight from spending time in competitors shops or wherever you will find customers to see how the service is, what customers like/dislike and talk about what your company will bring to the market. Get to know who your biggest competitors are and give details about how you will be better than them.
Sales and Marketing Strategy
Explain how you will promote your business and products and all the different ways which you will reach out to customers e.g. any marketing campaigns, use of social media, presence at events etc. Include a sales forecast (which can be tricky when you haven’t even started trading yet!) and pricing guide including timescales in which you aim to achieve an amount of sales. In business you will quickly learn that things can go wrong or can take longer than expected so it is important to include a plan to say how you will manage if you do not reach the anticipated amount of sales. Make sure you have a plan to get you over any first hurdles!
Describe how the business will operate on a day to day basis, such as where you will work and what the arrangements are with the premises and any equipment needed. Talk about any other staff involved and any major suppliers sourced including details of any credit terms agreed with them. If relevant, include any information to show that any legal and/or insurance requirements will be met.
You may wish to ask for help from your accountant if you have one at this point or from a business advisor. You will need to work out what the start up costs are to begin trading and then how much it will cost the company to continue trading each month. This includes all costs you need to cover in order for the business to carry on, including any rent, bills, insurances, stock, vehicles, stationary, wages etc. Put together a cash flow for each month of the first year of trading – the idea is to show that the business will have enough money coming in (eventually) to cover the running costs and make a profit. If it will take time to break even, talk about any provisions you estimate will be needed to make up the shortfall until enough income will be generated. You may want (or need to, if you are going to use this plan to help with a finance application) to prepare a profit and loss statement for the second and third years of trading.
This is simply a section where you can organise all the documents you have referred to as part of the business plan e.g. price lists, market research, legal documentation, sample promotional material, CVs etc.
Now that you have gone through all of the specific little details of your business plan – with it all still fresh in your mind you can write the first section. If you are going to use this plan to present your idea to someone else, remember it is the first bit they will see and first impressions count! Be positive and clear, provide the reader with an overview of what the business is about and include the most important points. You may wish to write this in a similar way to a covering letter on a CV – so that it is tailored to the person who will see it.
Starting a business is time consuming but I hope you will enjoy putting your plan together and take as much time as you can to familiarise yourself with your target market. Just think, one day your business could be the main brand – get excited about it! I found after writing a business plan I was much more confident in being able to talk about my idea and that really helped me get people on board and support me. Your business plan should prove to be an invaluable guide and source of information to you for some time and will be handy for you to look back on to check your progress.