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The purpose of a business plan is to set out a strong direction for your business, setting out clear objectives and how they will be achieved. You would normally want it to cover your plans for the first 1-3 years. Writing a plan allows you to focus and develop on ideas, and to identify priorities of the business. It can also act as a benchmark for the business’ future performance and what it needs to aim towards. 

 

Reasons to Write a Business Plan

To map out the future of your business

A business plan is like the blueprint for your business, you wouldn’t walk over to a plot of land and just starting cementing bricks together to build a house, without planning it first. A business is the same, building it without planning it first is foolish.

By putting your thoughts to paper, it will allow you to organise and set out the clear direction for your business, as well as any future goals, helping you to manage the business much more effectively with this in mind. You will be able to chart any specific courses of action that need to be taken to achieve those goals, and to make any improvements. It will help you to understand your business and its market better, placing you in a much better position for long-term success.

You will also be able to forecast your cashflow and decide whether the business is actually feasible before you start putting things together, saving you a lot of time and money in the long-run if you discover that it isn’t.

A business plan isn’t a one-off document that is done when you are starting off and then put to one side when you are done. In reality, the original plan will change and develop with the business and as new objectives are set.

To secure external funding for your business

Having a watertight, well-developed business plan is key to the success of your business loan application. The bank/lender will want to see evidence that the business will have the future ability to produce a sufficient cashflow, that will cover any loan repayments as well as keeping the business operating efficiently.

There are 100’s of businesses that require funding every day, the lender will also want to understand the benefit of investing in your business over others. Your business plan will provide evidence of your USP’s (Unique Selling Points) and what they can gain from their investment. It’s all about selling your business to them, and having it in a clear, thought-out business plan will show you are organised and dedicated, increasing the chance of your application being accepted.

 

What Should Be Included in a Business Plan?

There are many business plan templates you can find online, however, they all follow a very similar structure and should contain these 9 points:

  1. Executive Summary
  2. Introduction and business overview
  3. Products and services
  4. Market/Industry
  5. Competition
  6. Marketing strategy
  7. Operations
  8. Financial Information
  9. Future Development

Executive Summary

An executive summary is a one, or two, page summary of your entire business plan. This should be put first in the plan, but is often easiest to write after you have completed everything else. If you are writing the business plan with the view to present it to someone else, this will be the first section they read so it is important to make a good first impression. You should be positive, clear and outline the main and most important aspects of the plan.

Introduction and Business Overview

In this section you should introduce the business and what it is all about, and write the reasons you are starting it. You should include any relevant background history or experience you have in the field, including education and training, and anything that has led you to the idea of your business. You should also include information regarding any of your business partners or anyone else who is involved in the start-up.

You should outline the goals and objectives of your business, state any of your unique selling points (USP’s), and explain why customers will choose your company over some of you competitors.

Products and Services

Every business is based on a product or service they can offer to a prospective client or customer. In this section you should outline what the product or service you are providing is, how it will be made/sourced, and how it differs from what your competitors are offering. Again, in this section you should state your USP’s.

Market/Industry

Use this section to present your understanding of the market for your field of business. Do your research into this so you can explain the size of your target market, if there have been any recent market trends that you are tailoring your business to, and what your customers are looking for in a product/service. Doing this will show you are tailoring your business according to your market and you are taking steps to put your business in the right position for long-term success.

Competition

In this section you should show your understanding of the business’ competition. Is it a particularly competitive industry? If so, you should show how your business is different and what you will be doing to get ahead. You should also talk about your competitors’ strengths and weaknesses and if there is a current leader in the industry.

Marketing Strategy

Marketing is key to the success of a business, so having well-planned strategy is vital. You should use this section to describe the ways you will promote your business and how you will reach out to your customers. This could include various marketing campaigns, use of social media, and presence at events.

You should also include information of your website, if you have one, or plans to create one. Websites are now a huge part of the success of many businesses, so it is important to describe how you will be utilising this outlet.

Operations

In this section, you should describe the everyday running of the business. This should include any arrangements you have with the premises at which you will work, and any equipment you need. Also, talk about any staff, management teams, and suppliers (including any agreed credit terms you have with them). If relevant, you should also show how any legal and/or insurance requirements will be met.

Financial Information

For this section you may wish to seek help from a financial or business advisor, especially if you are writing the plan to secure a loan application.

You will need to work out all of the start-up costs for your business, and what your costs will be to continue trading every month. This will include any rent/mortgage payments, bills, insurances, vehicles, taxes, stock, stationary, salaries, staff wages etc. Using the rest of your business plan, you should also be able to estimate what you expect to make each month. Using all of this, you then need to put together a cash flow for the first year of trading to show that the business will (hopefully) be making enough money to cover all costs and make a profit. If it will take a few months to break even, explain what you will be doing to make up the shortfall until enough income is generated.

After the first year of trading, you will want to make a profit and loss statement for the second and third years of trading, especially if you are writing the plan to gain funding.

Future Development

In this final section, you should talk about any future plans you have for the business. This can include any future goals and any achievements you want for the business, and any plans to start any other businesses.  

 

Business Plan Top Tips

Tailor to the audience

When you are writing your plan, think about why you are doing it and who will be reading it. Although the main facts and figures should stay the same, you can change the structure of the plan to highlight the main aspects different audiences want to see. For example, an investor will want a clear explanation of how they will get a good return, and a bank will be looking for evidence that you will be able to afford to pay back the loan before they accept your application.

Pay attention to detail

Your plan should show your organisation and professionalism so, there shouldn’t be any spelling mistakes, any grammar or punctuation errors, or any unrealistic figures and ideas. It should be well thought-out and structured, and professionally presented. This will help to make a good first impression of your business.

Don’t leave anything out

This may seem obvious, but it is very important that you cover everything and don’t leave out any important information. You need to know the ins and outs of your business. It will reflect badly if you are presenting your plan to others and you are questioned on something you don’t know the answer to.

Get your financial information right

If numbers aren’t your forte, you may want to seek advice from an accountant to go over your finances. This section of your plan will face particular scrutiny so it is important that all figures are accurate and well-founded. All costs should be included, and all sales predictions should be realistic.

Executive summary

Arguably, the executive summary is the most important part of your business plan. It should contain all the main and important aspects of your plan and will often be read first by anyone you are presenting the plan to. It should be concise but thorough, and engaging enough to make them want to read on. It is normally best to write this part at the end so you already have all the facts you need ready to go.

 

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