Are you a business that is seeking funding from an outside source? If so, you will require a formal business plan. If you have a brilliant business idea, writing a business plan is vital for the launch and growth of your venture.
As well as securing additional finance for your company, a business plan can be a useful tool to help you define the sort of business you are developing, as well as allowing you to focus on specific short and long-term goals, so you have a strategy for your business’ future. It is also a great way to share useful information about your business and can really make a difference when it comes to securing investment.
Why write a business plan?
Quite simply, your business plan is a blueprint for your business. It will help you to establish if your business is feasible and will give it the best chance of success. Taking time to work on this important document will ensure you pay attention to the broad operational and financial objectives of your business, helping you define areas such as your target market, your unique selling proposition, pricing strategies and how you intend to sell to your customers. These details will ensure you drill down how you plan to deliver.
Most new businesses need capital to get started and having a concise, clear but detailed business plan will give a business a better chance of investment from banks, equity financing or angel investors. You will need to ensure the document is shareable and one that can be revisited and reviewed regularly, so all ideas are formalised and you stay focused.
So how do you write a killer business plan? Follow our step-by-step guide.
What should you share in your business plan?
Anyone who reads your plan should be able to understand what your business does, so it needs to be clear and concise.
Introductory details: This should include the business name, business and owner details, such as address and contact details.
Executive summary: This is the outline of your business and include details such as: What your business does, for whom and why – its purpose; what the business will achieve in the coming months and years; how much money is being invested or raised to reach certain targets; and where that money is coming from. This should be a powerful, persuasive, memorable and incisive summary of the business. This section should not be more than a page or two at the most and should be the last part you write, summarising everything that has been written.
The business: This section should look at your company’s products and services and go into more detail about its aims and unique selling proposition. What is the problem that you are solving and why do people need what you are selling? How will you meet these needs? You will need to include how your business can be expanded to cater for future needs or adapt to changes within the marketplace.
The market & competitor analysis: This section should look at the size of the market and highlight trends and developments within it. It should summarise the key competitors, who they are, how they work, what share of the market they hold and their respective strengths and weaknesses. It is important to state what will make you stand out from our competitors and why your business is different.
SWOT analysis: Standing for Strengths, Weaknesses, Opportunities and Threats, this section should analyse factors that may play a role in the success of your business and how you plan to compete with other companies in your sector. This analysis can give you more flexible and tailor-made framework to analyse your business idea. Highlight any weaknesses in the market and your business and detail how you will address them.
Execution: This section will tackle how you are going to run your business with a number of sub-sections, including marketing and sales, operations and benchmarks. The marketing paragraphs will cover the group or groups of buyers you are targeting, indicating the key characteristics of typical buyers and should include any customers you may have lined up. If your business will be consumer-facing, create personas to illustrate the different type of people you are targeting. It should also address how you aim to promote your product, be it through advertising, email, direct mail, digital (web and social media) or via public media relations. The operations sub-section should also detail the divisions of your business, including all the systems and procedures involved, including sales, marketing, administration, stock control, IT and quality control. There should also be details about suppliers, payment, transport, equipment, legal requirements and insurance.
The team: This will detail more about you, why you have decided to set up the business, your qualifications, education and your strengths. It should also outline the background and experience of all the key team members, detailing their roles, experience and strengths. You may wish to include other people involved in your business, such as advisors or accountants.
Financials: This section will need to provide all the financial data on your business, including the estimated costs of starting and running the business; how much additional finance is required; sales forecasts for the first year; profit and loss forecasts for the first three years; the budget and pricing plan; and cash flow forecasts.
Appendices: This features copies of essential additional supporting documents including credit history details, contacts, CVs of key team members, reports, tax returns, receipts and bank statements, market research results and any detailed cash flow plans. Most of this information will be confidential, so this section can be tailored, depending on who is receiving it.
Top tips for writing a business plan
Keep it concise: Keep your business plan short, persuasive and punchy. Use short paragraphs, bullet points and relevant graphs and tables, if appropriate. Also, avoid technical jargon and use SMART objectives – Specific, Measurable, Achievable, Realistic and Timely.
Research: The foundation of any good business plan is research; every crucial question about your business should be answered.
Know your audience: Think about why you are writing a business plan and who will be reading it. Is it to drum up a loan or equity investment? Or is it simply for you to map out where your business it going? This will help you stay focused.
Presentation: Your business plan should be clear and easy to navigate, with a contents page at the front. Ensure it is designed well and is accessible to all.
Using software to write your business plan
There are a number of software options on the market that can help you formulate your business plan and guide you through the process, step by step. For example, LivePlanoffers a range of tools to help businesses, entrepreneurs and start-ups write their plans. The software includes sample plans and allows you to track your progress against your plan. Available from £8.25 per month, billed once every 12 months, it is suitable for any type of business in any stage of development.
Other useful resources include major high street banks who offer templates for your business plan to show you what they are looking for. They may also have small business experts who can help. If you use an accountant, they will also be able to offer advice about planning your business.