Whether you’re a start up, small business or a more mature larger business, having a business plan as a foundation to your business and a roadmap for structuring, running and growing your business can be crucial. Although a business plan doesn’t guarantee the future success business of your business, it can often mean the difference between business success or failure.
Business plans help you run your business
A good business strategy helps guide you and your business. Your business plan can guide you through building and growing your business and helps you think of everything in this process.
Whilst they are not something youll pick up and read every day, stepping back from your business once a month or once a quarter and comparing where your business is in relation to your business plan can be a valuable exercise.
Why write a business plan?
When you have a new business idea, you need to carefully think through that idea and a business plan will help to map out if your business idea is mere fantasy or whether it will actually translate into a workable business.
See a business plan as a way of sense checking your idea and future plans. It should be the start of the process of deciding whether you should start a business or not.
If you’re going to be looking for funding, whether from a bank or other source, then a business plan will be critical to convince lenders to loan you funds to set up and run your business.
A business plan should be a step to:
- check that your business idea makes sense.
- identify challenges and how to overcome them.
- set out your objectives.
- set out your projected financials.
- plan your sales, marketing and business operations.
- set out a marketing and sales plan for the business.
- understand what funding you need.
- convince others to support your business.
Once written, the plan also acts as a benchmark for the future performance of the business.
Top tips to write a business plan
A full business plan should contain the following sections
- Executive summary.
- Business purpose/vision.
- Sector / market overview.
- Competitor overview.
- Operational overview.
- Marketing and sales plan.
- Financial projections.
The executive summary section should summarise the other sections in your business plan but should be a high-level view of your business idea, purpose, objectives, marketplace and financial potential.
The executive summary will be the first thing external people will read, so spend time on making this thorough but concise and selling your business plan and ideas.
Purpose & vision
A purpose statement explains why your business exists. It explains what problem your business solves and why your organisation exists.
A vision statement is a statement of what you think the future looks like if your business succeeds. It should be aspirational and should inspire you and anyone who reads it.
Products / services
As part of your business planning process, you should be able to describe accurately (but not too technically) what your products or services are.
What challenges do your products or services overcome, benefits do they offer to a customer, and why your customers would purchase this product /service.
It may also talk about future products / services or changes that you may make.
Imagine that you’re five years further on. Where do you want the business to be? Think about areas such as size of the business, no. of employees, market share, geographic expansion, diversification, product / service additions etc.
Sector / market overview
This section is a quantitive and qualitative assessment of the market your business is looking to enter. It should define your target market, the size of that market and your experience in the market. You can do this sort of research via the internet, through local or sector knowledge you already have.
This can be a difficult section to write as you need to understand who they are, where they are and then be able to objectively analyse them. Ask yourself these questions:
- Who are you main competitors?
- Where are your competitors based?
- Do a SWOT analysis on your competitors (Strengths, weaknesses, opportunities and threats).
- What are their products or services that directly compete with yours?
- What benefits do your competitors offer?
- Why do customers buy from them?
- Why will customers buy your product or service instead?
- Whats your competitive advantage?
This section is about the daily business activities and should include the physical needs of your business including property and equipment needed.
Your operational overview should include processes, responsibilities, production and quality control details.
Marketing & sales plan
Knowing exactly who your potential customers are and how you will promote your business to them is crucial. This is why its important to be clear on your sales and marketing plan. Ask yourself these questions:
How will you attract customers and what channels will you sell through?
Who are your ideal customers?
How will you differentiate yourself from your competitors?
This section should clearly define the following:
- your value proposition.
- potential customers / target market / audience.
- pricing strategy.
- marketing and sales channels you’ll use.
- tools and resource needed to market & sell.
- business partners that you can utilise to promote and sell your product/service.
This section should include your forecasts for both the cost of running your business but also the revenue you are planning to generate and the profit margins you hope to achieve.
You should also include a cash flow statement as cash flow is the lifeblood of all businesses and will be critical in your business continuing to trade.
Include these details:
- Sales forecasts.
- Cost of goods sold.
- Profit and loss statement.
- Cash flow statement.
Read our blog ‘What financial information do I need in my business plan?’
People / team / management
This section should initially cover who is involved in the business, the ownership structure and any other people you’ll need to run the business now and in the future. Explain your recruitment and training plans.
You may decide to outsource some parts of your business, rather than recruit, so detail these plans as well. These may be accountants, marketing, IT consultants, business coaches.
Any supporting documents for your plan should be contained in appendices to the main plan.
Top 10 tips for writing your business plan
- Keep your plan as short as possible, whilst covering key areas.
- Include more detailed analysis in appendices.
- Be realistic and objective.
- Download a business plan template.
- Write it for someone that doesn’t know or understand your business.
- Get others to read it – friends and family, advisors, mentors etc and get feedback.
- Review it regularly and adjust if necessary.
- Research as much as you can.
- Provide supporting documentation or research information.
- Avoid jargon.
How do I write a simple business plan?
If you don’t have time to write a really detailed business plan and if the document is only for your or internal use, then summarising the sections above, will make a good short simple business plan.
If you’re looking for funding or support for your business plan, then it needs to be more thorough and must truly show your understanding for the business and convince others to believe in it.
Whether you’re starting a business, are a small business or a large business, a solid business plan should act as a blueprint for your business and a roadmap for how you’ll achieve your objectives.
Taking time to sit down and write a business plan, will give you time to assess if your thinking and plans are realistic and achievable.
You need to ensure that your business plan is a roadmap of your ideas and research youve done, along with financial projections.
Your executive summary should be a concise summary of the rest of your plan as this will be the first thing people read in your plan about your business.
You may want to pick up a free business plan template online but having a third party help you to formulate your ideas into a business plan can be invaluable, especially if you are writing it to try and obtain funding.
Here at dns we can help you to formulate a business plan. Our business planning team work with hundreds of businesses from start up to those looking to write a business plan to gain additional funding.
If you’d like more information or advice on writing a business plan, call us on 03330 886 686 or e-mail us firstname.lastname@example.org.
Any questions? Schedule a call with one of our experts.