A business plan outlines your vision for the future of your business, looking at where you are now, where you want to be by a given date and how you intend to get there.
This guide looks at:
The benefits of a business plan
Many businesses fail because they don’t have a clear strategy and objectives. Writing a business plan forces you to address the details of your own business proposal and clarify exactly what you have to do to make it a reality.
Any shortcomings or potential problems will soon become obvious if you take the time to look at your business idea objectively. In this way you make your mistakes on paper rather than in reality.
A good business plan will:
A business plan is not only for business start-ups. It is an evolving document that should be reviewed regularly. It will always be a useful tool to persuade others to invest time, money and effort in your business.
What should be included in your business plan?
A good business plan answers four simple questions:
Purpose
You should be able to sum up your purpose in a couple of sentences. It should clarify what you want your business to achieve, beyond making a profit.
Objectives
While purpose is general, objectives should be SMART:
You may have a number of different objectives, but they should complement each other and be prioritised.
Strategy
While your strategy may be flexible, it should always be grounded in thorough market research. You should investigate:
Include a SWOT analysis, listing your business’ Strengths and Weaknesses and then the Opportunities and Threats to your business from the outside world. This will help you make sense of your research.
You should then be able to answer the following questions:
Budget
The success or failure of your business rests on its ability to make a profit and anyone thinking of investing in your business will scrutinise your budget closely.
Work to a 12-month cashflow and estimated two-year profit projection, breaking down your budgets into monthly figures, showing the main areas of expenditure and income.
Remember to include contingencies in every area to cover unexpected costs. While you need to show confidence in your business, unrealistic projections are likely to do more harm than good. It’s safer to be pessimistic than wildly optimistic.
Exit strategy
It’s not essential, but including details of any proposed exit strategy demonstrates the thoroughness of your planning.
Executive summary
Start your business plan with an executive summary to provide readers with a quick overview of the whole report. This is best written last.
Language and structure
A good business plan should be:
Don’t be put off if you don’t have all the information you need from the start. A basic outline can be filled out as more details become available and even a simple financial forecast can highlight any shortcomings in your proposal.
The structure of your business plan
As a basic starting point, divide your plan into four sections:
For each of these sections, consider the following areas:
You may find that a more detailed plan is necessary, but avoid including very detailed figures as these will be more likely to change and your plan will become out of date.
