You can significantly improve your chances of success by following these tips when writing your business plan
Writing a business plan is essential when starting your own business. It will describe your company, what it aims to achieve and how it'll achieve it. It will help you to clarify your ideas, identify potential problems with your business model, establish short and long-term goals and, over time, measure your company's progress.
A business plan is vital if you're looking to secure investment, but it can also convince customers and suppliers to support you. While you should update your business plan regularly, and you can seek further free help from small business advisers and local business support organisations, here's a suggested structure to get you started.
After the title page - which includes the name and business address of the author, the date of publication, and details of the plan's circulation and level of confidentiality - you'll present your executive summary. However, bear in mind that this section is the last one you'll write, because its job is to grab the reader's attention by summarising what will follow.
Over three or four pages, briefly highlight the key purpose of your business plan, and précis the capital requirements, financial projections and management structure of your company. You should also provide details your competitors.
Your focus throughout should be on highlighting how your product or service capitalises upon a significant market opportunity.
Begin this section by addressing your company's products and services, before going into greater detail about its aims and objectives. Expand on the history of your business, and explain its ownership structure. You should also mention what type of business it is.
An overview and outlook of the industry should be included, covering details of any relevant regulations and specific markets of interest. However, you should bear in mind that this particular information will be expanded on in the market analysis section.
Finally, address how your business can be developed to meet future needs or changes, and admit any weaknesses that it may have. Being open in this manner will inspire confidence.
Essentially a condensed marketing plan, this section focuses on several factors:
- Market research - It's vital to know that you've got a group of buyers for your product or service. Become familiar with the industry and market, so that the company can be positioned appropriately in terms of price and quality.
- Target audience - Discuss which market segments you're aiming to pursue, such as local customers or those of a particular age group. Indicate the key characteristics of your typical buyers.
- Competitors - Summarise your competitors' strengths and weaknesses, and consider how you can prevent others from entering your marketspace.
- Existing customers and sales - Mention any customers that you've already lined up and address how you'll sell, whether it's over the phone, on your website, face-to-face or through an agent. In addition, if you have more than one product or service, consider the contribution of each to your turnover.
- Marketing strategy and goals - Address how you'll promote your product. This may be through means such as advertising, public relations (PR), direct mail or email. Examine likely sales, growth, profit margins and costs.
Management and operations
This section explains how your business will function. You should detail the:
- Background, experience and training of the management team - Highlight individuals' roles and responsibilities, plus their relevant skills and experiences. You should also mention the financial contributions, salaries and company benefits of each member.
- Capital requirements - Discuss the company's needs in terms of equipment, facilities, insurance and personnel, before highlighting any potential limitations to production.
- Logistics - Detail each division and their assigned tasks, addressing how you'll cover sales, finance, marketing, administration, stock control and quality control. You should describe the systems and procedures that will be involved in all aspects of production, from the customer's initial payment through to transport and delivery, including detailed information on your suppliers.
In this section, you must translate your company's aims and objectives into measureable goals. This means providing numbers including:
- the estimated costs of starting and running your business
- how much additional finance you require, plus what it will be used for
- sales forecasts for the first year
- profit and loss forecasts for the first three years
- cashflow forecasts, showing that you've considered key variable factors such as sales revenue and wages
- your budget and pricing strategy.
Be aware that you should justify any assumptions that you've made when reaching each forecast.
Consider any risks associated with running your business, plus any legal obligations surrounding factors such as insurance, licences, and health and safety.
Create detailed what-if scenario backup plans, documenting how you'll react to potential problems. This will help you to minimise risk and enhance your credibility with potential investors.
The appendix features copies of essential supporting documents, such as:
- credit history information
- detailed cashflow plans
- detailed CVs of the management team
- market research results
- receipts and bank statements
- tax returns.
Much of the information contained within your business plan will be highly confidential. You should therefore tailor your appendix depending on who is receiving your plan - potential investors, for example, will expect to find out more than potential affiliates.
Find out more
- Discover whether self-employment is right for you.