In business, planning is everything. Whether you’re starting in business for the first time or you’ve got years of experience under your belt, one thing remains true: you need to have a thorough business plan. There’s so much else to do that it’s easy to put this to one side, but it’s an absolute must-have.
There’s an old saying: “Fail to prepare, prepare to fail”. Even the best business idea won’t get anywhere without preparation. A business plan can help you set your new startup or small business on a healthy trajectory of sustainable growth, as well as equipping you to navigate challenges you’re likely to encounter along the way. In this guide, we’ll look in detail at how to create a great business plan.
A business plan isn’t just about a balance sheet, as important as that is. It’s a written document where business owners outline their key activities and objectives and sketch out a general strategy for reaching them. Both new startups and established firms looking to expand use business plans to attract investment.
Your business plan can help you identify and understand your target market, devise reliable financial projections, create a roadmap for the future and provide an executive summary of what you’re trying to do. They also allow entrepreneurs to list key objectives and explain to potential investors how they intend to realise them.
Business owners should revisit their business plans periodically. This is because circumstances can change, often quite rapidly, and render business plans outdated. They should therefore rework their business plans so that they’re in line with current targets and expectations.
If you’re looking to entice new investors to put cash into your business, you’ll need to convince them that it’s going places. After all, seasoned investors—including venture capitalists—need to see that you have a credible vision for your business. A good business plan can go a long way to convincing them that it’s worth their while.
Potential investors will also be looking for proof that you’ve undertaken a proper competitive analysis, have a credible marketing strategy and that you understand your potential customers’ demographics. This can provide them with the reassurance they need to provide the firm’s capital for future scalability.
Of course, business plans aren’t only about external investors. They’re also useful for internal teams, giving a clear sense of direction to any decisions undertaken. Even if you have all the funding you need, you should still have a business plan in place to ensure you’re heading in the right direction.
Now we know why you need a business plan. But what exactly goes into one? Let’s take a look at the core components your plan needs.
An executive summary provides an overview of your business and what you’re hoping it will achieve, including a concise summary of the other sections of your plan. As such, you should leave writing it until last so that these summaries accurately reflect the contents of their respective sections.
Don’t forget to include your value proposition, which encapsulates what your business is about and what makes it stand out from its rivals.
Next, you’ll need a company description covering three key areas: your business’s history, mission statement, and key objectives for the future. You don’t need to be exhaustive here—instead, it’s better to be concise. Your objectives, too, should be realistic, concrete, and measurable. Otherwise, they won’t be credible either to investors or employees.
Your business plan must include solid market research. Think about who will comprise your customer base and their demographics—including age, location, class background, hobbies and so on. To be precise, otherwise, investors are likely to look at your analysis with some suspicion.
Next, you need to look at who your prospective competitors are. As daunting a task as this might sound, you need to know what your business’s rivals are doing. This might include their approach to marketing, their social media output, their standards of customer service, how frequently they launch new products, how they perform in customer reviews, and other vital details.
In your plan, you need to explain what products and/or services your business will offer. This must include the specific benefits, how new products are produced (including how raw materials are sourced), pricing, intellectual property (where relevant), and what makes your offering distinct from those of your competitors. Investors need to be convinced of both the viability and profitability of your product.
A marketing strategy is crucial to getting new businesses off the ground and expanding them. You should recap your growth strategy and target market before explaining how you intend to market your business. This marketing plan can include online promotion, loyalty schemes, media ads, and customer retention strategies.
Your business plan must address the financial aspects of running your business. If you’re launching a brand new startup, you obviously won’t have past financial records to discuss. However, you should still cover budgetary issues in your plan.
You’ll need to include income statements, balance sheets, cash flow statements, and profit and loss statements for established businesses. Three years of reporting is ideal, if possible. Needless to say, you must ensure that all figures are accurate and reliable.
It’s important to address staffing in your business plan. Talk about your existing team and, where applicable, where you’re looking to recruit additional talent. You should also address your legal structure, whether you’ll be forming an LLC or incorporating your business, and the cost of hiring legal experts and accountants to ensure compliance.
When you’re starting a business, there’s a lot to do! Writing a comprehensive plan for your business might sound like quite an undertaking, but there are some things you can do to make the whole thing less strenuous. Firstly, you should keep it concise. Truly comprehensive business plans need to cover much ground, but they don’t need to be epic in length; 10 to 20 pages should suffice.
Your plan should also be written in plain and straightforward language. Could you not make it impenetrable? Don’t forget that investors and others receive many business plans, and they only have so much time in their day. Please get to the point, and make sure your plan is divided into clear sections so that it’s easier to digest.
Finally, make sure your goals and objectives are clear in your own mind. You need to know what you’re looking to achieve with your business and over what time frame. You might well find that your objectives change as you progress through the writing of your business plan, and that’s okay: you might learn new things in the process!
There are plenty of business plans which you can find online, and it’s worth reading some of these to help you get a better idea of what you need to include in yours. Let’s take a look at a couple of examples by way of explanation. Here’s the first:
A one-page business plan provides a quick overview of what your business is and what it does. It effectively condenses your full-length business plan into key points. This is particularly useful to potential investors, as it allows them to digest the ideas and strategies underpinning your business easily. Here what it needs to include:
A comprehensive business plan needs to detail what your business aims to achieve and why investors and lenders should back it. We’ve already listed the key areas you’ll need to address in the last section, but here’s a summary of what needs to be included:
You should also summarise your market research and provide an overview of your financial projections for the coming years. If you’re launching a startup, you’ll also need to discuss its initial financing requirements.
Investors will be keen to ensure that your business is potentially profitable before deciding to invest in it, so you should also include a breakeven analysis illustrating what it would take to make a profit.
It should go without saying that your business plan will need revisiting every so often. As businesses evolve, their plans should evolve with them. You should continually revisit your objectives to see how far you’re meeting them and reassess what your rivals are regularly doing.
Revising your business plan is an opportunity to assess whether you’ve met existing objectives and pursue new ones. As we’ve mentioned, the reality of running a business often diverges from the plan that’s on paper. Therefore, you should tweak your plan periodically so that it more accurately represents where your business is at and where it’s going.
Numerous tools can help you in writing your business plan. The US Small Business Administration has created a ‘Build Your Business Plan Tool’ that provides a step-by-step guide to writing a plan. You can write it section by section, saving your progress and returning to it later (it’ll be stored for up to six months).
You can also find resources to help you build your business plan on the gov.uk, the UK government website. It’s also worth looking at business plan software, including the following:
RingCentral’s cloud-based business phone system can help your business boost productivity through better connectivity. It allows you to take calls with HD audio wherever you happen to be, as well as to route incoming calls to a human agent or a virtual receptionist. Calls are protected by enterprise-grade security, with a 99.999% uptime SLA.
What all this means is that you can provide an even higher standard of customer service—keeping customers coming back, time and time again.
The internet is bursting with all kinds of small business productivity tips. It seems like…
Some of us take technology for granted. Think about it. Sending a quick WhatsApp to…
As customer expectations continue to skyrocket in the wake of a pandemic that made the…
How we work today feels very different to how it did just a year ago.…
How important is making any sort of call? It could be calls to or from…