How to Write a Business Plan
Business planning is one of the first elements of getting your act together when it comes to business. Having a great idea and running with it is one thing but the professional move is to ensure you have a business plan in place, with projections and goals in mind. A business plan is also essential to get others involved in your business such as angel investors or crucially bank financing.
Business plans sound complicated and many people are intimidated by the idea of them but in reality they can be simple and formulaic. Any self-employed mum or dad can get one completed and it helps create a clearer vision for the progression of the business too.
There is no single, definite way of writing a business plan or layout. However, the internet is packed with different types of layouts if you’re looking for one. The most basic plan should include:
- An executive summary
- A short description of the business
- Market research and proposed marketing and sales strategy
- Management and staffing details
- Information about the operation of the business
- Financial forecasts
Business plans for external investors and banks should be a minimum of 20 pages and around 40 pages as a maximum. Business plans purely for internal use may be shorter at around 20 pages maximum.
The business plan should be concise with all points illustrated by clear evidence. Pictorial evidence such as graphs, charts and pictures of products (where necessary) can help limit the denseness of text and help it appeal to the potential investors. A good business plan should be able to be skim read in around 15 to 20 minutes so dense text is simply not a good idea. Below we’re going through each of the key elements of the plan in more depth.
The Executive Summary
This is your business plan’s synopsis. The majority of people choose to write this at the end but it appears at the beginning of the report when formatting properly. It makes more sense to write it at the end as you have a clearer picture of the whole plan. The executive summary shouldn’t go beyond 1500 words and remember, sometimes potential investors will read no further than this point. It’s got to be good!
Describing your business can be harder thank you think. This section is your chance to simply and concisely put across exactly what you do. You should cover where your business is at the moment of writing, where it came from and where you plan to take it in the future. You must include details of trading, whether you are currently in business or when you plan to start.
This is also the opportunity to get the essential information about your business down on paper such as its legal structure and its history. You will also include any patent, trade back or design rights owned at this point and also define any intellectual property.
The business description is also your chance to show off, why is your product or service exceptional. What are its unique selling points cementing why people will want to buy it. Outline how you plan to grow and develop your business through marketing or extending the product range. Keep jargon out of your plan at all times, if it is necessary explain it.
Market Research & Proposed Marketing
You should include the details of all the companies you consider your competitors and highlight where you’ll fit in the market. You could also have a clear and defined vision of your customers. If you have a target group in mind this must be fully defined in terms of age and gender and even income and interests where necessary.
The b2b market is slightly different but you should still define the type of business customer you hope to attract. Whoever you are targeting your business plan should highlight exactly why your target customers will choose you.
Your market research should lead to your understanding of the size of the market and the share you hope to attract. Your marketing and sales strategy should lean on from this and you should highlight the channels you plan to exploit and the costs related to them.
Management and Staff
Potential investors will be keen to see you have the clout to deliver the goods described in your business description and marketing plan, this means they’ll expect experts within your team. Include all your staff and their specific role and also how much money they will be putting into the business. You should also include the name of any professional external advisers such as your lawyer or accountant as this gives further assurance of your dedication. Prospective salaries should be laid out and you should also highlight if you plan to recruit in the future.
Your plan must include details of your current business location the costs involved and the reason for this choice. As a WAHM it’s pretty clear your business location is likely to be your home but explaining the reasons behind this is essential.
You should also list the facilities you require to deliver your products or service. This means both facilities in-house and those which you access through outsourced means. Your IT requirements should be included here and highlight if these are likely to change in the future.
This section is completely crucial. If an investor has enjoyed and agreed with your whole plan but the forecast is wrong, they’re likely to pull out. It doesn’t matter how good an idea is if the numbers don’t add up. Everything you have previously mentioned should be able to be summed up in numbers reflecting how you expect the business to grow.
The financial forecast in your business plan should cover three to five years and highlighting how you expect sales to progress, when you expect to make profit and how your cashflow is looking. Information on the capital you require should be documented here as well as all sources of revenue and investment assets and outstanding loans.
For your financial forecast to impress you need to be realistic, being over optimistic is often telling and an investor can often see from the outset that your projections maybe hard to achieve. If you’re starting a brand new business then you’ll have to provide estimates but be cautious rather than exaggerating.
If financial investment is key to your business’ growth then a business plan is essential. Many businesses also use it as a key motivator, with goals to aim for and forecasts to meet.