We all know writing a business plan has huge benefits at the start of planning a new business. Sometimes it's just for yourself so you can understand your business better, sometimes you will have to do a business plan if you seek funding or finance. Importantly you need to write your plan with the reader and the purpose in mind, so before you start, ask yourself two questions:
Who are you writing the plan for?
- Yourself/your parents
- The bank/other lenders
- Grant applications
- What is the purpose of the plan?
- To get a better understanding for your own use
- To persuade others to let you rent/loan/have an asset or resource
- To get a grant
- To source finance
Structuring a written business plan – template
Summary of the business
- An overall summary of your business – these are your first impressions on the reader, make it snappy and engaging.
- Make it concise, and easy to read. Try to imagine you are explaining your business to a stranger on the street. Would they understand it?
- Include a handful of your main goals or objectives, you may find it better to split these into short-term goals (up to a year), mid-term (1-3 years) and longer-term.
- Highlight key facts and figures including a financial summary which reflect your budgets.
- It should be no longer than two pages of A4, shorter is fine if it says it all.
- Because it is a summary, you should write this section after having finished the rest of your plan.
- This section is the opportunity to explain why you think you have the experience, ability, knowledge and commitment to be able to make this a successful business.
- You should set out your relevant experience and relevant qualifications. Experience doesn’t have to be in the same sector, for examples you could have customer relationships or sales experience from a different role.
- Provide some detail, avoid relying on particularly emotional reasons, as to why you want to start your business.
- If you want to really impress you could also attach your CV.
The business opportunity
- What is the product or service you are going to sell?
- If it is niche or new, the reader may not be familiar with the terminology, so you should explain everything, even if it seems obvious to you.
- Describe the different types of products or services.
- What makes your product or service different or competitive?
Who are your customers?
- This is your first opportunity to demonstrate you have really done your research and understand the market.
- Be specific and set out your target market, specifically the actual people you hope will be buying from you – not general commentary about those type of people.
See also: Identifying your target customer
- If your business has already started, include information about who and what you have sold so far.
- Even better, if you have got a contract or people that will commit to buying from you give lots of detail and ideally a letter from those people confirming this.
- When describing your customers, break them down into individual consumers or businesses. If a consumer, are they male/female, how old are they, why do you consider them your target market? If a business, what sector are they in, where are they located, how big are their businesses?
- Will you be accessing them face-to-face, over the telephone, online?
- This is your opportunity to demonstrate you understand how your product or service fits into the wider industry.
- You should give an overview of the industry you are entering into, and highlight any relevant facts and figures. Use economic facts and trends where available.
See also: Useful resources for market research
- You need to back this up with quantifiable or qualifiable market research that you can reference.
- You should set out the market research you have undertaken and what your conclusions are. This includes research on the internet, from industry sources and from your own research such as surveys etc.
- If you have done any testing of your products you should include the results of this – if it relates to numbers (i.e. number sold) then include that. If it is product development such as making a food-based product, give a summary of feedback.
Sales and marketing plan
- Provide a detailed overview of your marketing and sales strategy. How are you going to inform your target market about your product or service?
- What type of marketing are you going to undertake and why do you think it will work? Include traditional marketing (advertising, business literature, direct marketing etc) as well as digital marketing (AdWords, remarketing, paid advertising, social media).
- Don’t forget that whatever marketing you say you are going to do, the costs should then be included in the cash flow and budgets.
- This shows you have considered the strengths, weaknesses, opportunities and threats that face your business.
- Strengths – good things about your business plan that gives you an edge on competitors. A contract in place for sales or low starting costs.
- Weaknesses – anything that might affect how well your business will work. This could relate to the industry, the product or you as a person. Where you identify a weakness, put an action point detailing how you are going to address it.
- Opportunities – anything which poses you with an opportunity within the industry.
- Threats – what external factors could affect your business plan such as new regulation, your competitors.
- Talk through the production process:
- Suppliers, sourcing materials, how processing takes place, premises, packaging, delivery and transport, payment processes etc.
- Who are your staff, what are their skills?
- What legal or regulatory requirements or obligations are there and how you are going to deal with them.
- You should prepare a full set of budgets that accompany your business plan, including a list and amount of capital start-up costs, cashflow forecasts and profit and loss forecast.
- In the main text of your business plan, you should provide commentary on why you have used the figures you have and justify how you arrived at those figures.
See also: Feasibility budgeting for new businesses
- You should also include a detailed commentary on your pricing strategy.
- Include any assumptions you have had to make.
And that’s about it. If you are approaching the bank or a lender for a large amount of money they will expect your business plan to contain sufficient detail that they can make a decision on the risk involved, so your plan will need to be robust and detailed.
If you are starting a small business with little investment required you may not need to go into so much detail, but even just spending some time working through each section will help you question the business plan so you can get it right in your own mind.
Finally, below are a few handy hints for your business plan:
- If this is for the bank or other lenders make it look presentable
- Put a front cover on
- Write it in report format, and number your paragraphs for easy reference
- If it is to be emailed, PDF it
- If it is to be printed and posted, print on good quality paper and bind it if possible
- Write a cover letter or email
- Check for obvious things like spelling
- Check the format. A good font like Arial in size 11, formatted with paragraphs and numbering
- Get someone you trust to read over it impartially, and for areas that are not understandable
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