Why write a business plan?Your business plan is the framework for your business idea. You need a business plan in order to: - gain credibility;
- obtain funding;
- be able to plan effectively and manage risk.
Your business plan describes the aims and objectives of your business, its market, strategies and financial forecasts. Without it there will be few who will take your ideas seriously. Generally, a plan highlighting your intentions and ambitions over the next three years will suffice to begin with. The process of preparing the plan will enable you to evaluate the feasibility of your idea and focus your mind on how to make your business a success. It will become a sales tool, help raise funding, attract potential business partners, suppliers and clients or even persuade reluctant parents. Your aim is to persuade readers that your idea is a viable, and that you (and your partners?) have the necessary motivation, skills and business acumen to succeed. back to top What should it include?There are many different templates for business plans, and terminology varies, but generally you should include the following: Executive summary: an overview where you can capture the people’s interest without making them wade through all the detail. Whilst the rest of the plan will change frequently over time, this summary should remind you of what you set out to do and why. Business concept: a summary of the following: - What are you actually going to do?
- What is the business providing?
- What are the core products or services?
- How will you sell and deliver the product to your clients?
Business ownership: what form does it take - e.g., sole trader, partnership? List all of the key people involved in the business and their relevant experience, knowledge and accomplishments. Market summary: evidence that a market exists for your product or services. Describe three key areas of the market place – its history, current performance and forecasts. Review changes in market share, leadership, market variations, costs, pricing, competition and related opportunities relevant to your company’s success. Competition: a summary of your competitors, their reasons for success or failure. Demonstrate how your business will be different, i.e. outline your company’s competitive advantage. Goals and objectives: demonstrate that you have clearly defined SMART goals that are: - Specific;
- Measureable;
- Achievable;
- Realistic;
- Time-framed.
Include short, medium and long-term goals that describe specific measurable objectives such as market share and revenue/profitability. Break these down further to highlight how you will achieve these objectives. Financial plan: definition of relevant financial factors, including pricing assumptions, cash-flow, expected sales and profits for at least your first three years of trading. Include any financial assistance the business needs (loans, overdrafts, director’s capital) and demonstrate your business’s ability to repay any borrowing required. Resource requirements: details of what the business needs to start and grow, including: - technology: machinery, photocopier, tools, computers;
- personnel: business skills, specialist staff, operatives;
- external resources: products/services outside the company
- other: e.g., financial, distribution, promotion/marketing.
Risks: all successful entrepreneurs are able to identify, understand and plan for the risks they face in running a business. Examples include competition, changes in technologies and legislation, lack of funding and skills shortages. Describe such risks and their potential effects on your business and propose a response to mitigate possible damage. Annex: any additional details you think will add value to your plan, such as: - full CVs of the management team;
- promotional material;
- market research results and reports;
- competitor materials;
- details of premises and equipment sought;
- details of previous/current business success.
It is important that you are comfortable with and understand the terminology you use. This is crucial for gaining and maintaining confidence in your stakeholders. Asking questions at the beginning will significantly increase your chances of success.
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