If you’re due to start anything, it’s always best to go in with a plan, and a business is no different. You may be a budding entrepreneur, but you need more than a flash of inspiration to get the logistics of running a business under control. A business plan will help you better understand how you will reach your goals, and what it will take to get there. It will also be vital for any business loan applications you want to make - but even if you aren’t seeking extra investment, making a business plan should still be top of your list as you build your new venture.
What is a business plan?
A business plan is essentially just that – a plan for how you intend to take your business from an idea to a successful company. A well-written business plan will cover the following in a way that is clear to you, potential investors, key shareholders and legal bodies:
- A clear and thorough explanation of your business idea
- Any problems you predict may occur, and any safeguards you have in place
- Your goals and what you want to achieve by starting this venture
- Financial forecasts of the business
When it comes to precisely how to write a business plan, less can sometimes be more. While banks, investors and legal bodies may require a high level of detail, you ought to also have an easy-to-digest, simple business plan that your staff can quickly and easily process in order to better understand their role in your business’ growth.
Why are business plans important?
Without a business plan, the vision and future of your business will likely be exclusive to your head, and without getting things down on paper, you won’t be able to understand the purely logistical side of things. In the most basic sense, business plans are the stage which separates the idealistic fantasies from the solid business proposal.
Internally, your staff also need to know precisely what they’re working towards, and stakeholders will also want some way to compare and contrast the business’s performance you forecasted and the reality once you are off the ground. A business plan is a roadmap for a journey your whole team is on, so it is essential you have one in place.
How to structure a business plan
The structure of the business plan should be set out in a way that’s easy to follow and which makes it simple to digest. There are sample business plan templates to help you get started, but here’s what you need to make sure you have laid out in your plan:
Company summary: Your business plan won’t mean very much unless you give the reader an introduction to the brand it refers to. The summary doesn’t need to be very long, but it should include key details likethe date it was founded, who key personnel are, what you are offering and what progress you have made.
Explain your product or service: This is where you can make your business stand out and explain why it’s unique. If you plan to modify or develop your product as your business grows, you should also lay out these plans here.
Explain your market: If you know there are large names already dominating the market, you should also make it clear that you are aware of the competition and have assessed the market you’re looking to enter. Which market segment does your brand fill? Do you foresee any trends? Explain these and how your business will adapt to them. You should speak with confidence about how your brand will be able to compete with like-minded businesses, but you should also remain professional and not criticise your competition.
Explain your sales structure: Outline your pricing structure and how you intend to market your product. This is also where you can explain any USPs your product may have, as well as which features you intend to push. How are you selling? Do you intend to move into online selling as well as offline or vice versa? All your marketing plans and their costs should be laid out.
Explain your management structure: This may even include CVs of key personnel and evidence of how invested you all are, not just financially, but in the time and work you have already dedicated to the brand. You should also explain how you plan to manage your staff successfully to maintain a motivated team, this could be by offering benefits or placing a rewarding training plan in place.
Explain your operations: Here is where you can include details of your current premises, digital payments systems, production process and all the operations you use to make your business run smoothly and successfully.
Include financial forecasts: This should cover the next two years at the least but can cover up to the next 5 years. The detail needed here depends on the size of your business, if you’re only small, you may only need to show profit and loss and cash flow statements. Your forecasts should be backed up with logical and well-researched reasoning. Don’t’ be afraid to enlist the help of an accountant or finance professional to help you with this step.
Outline your potential struggles: Also known as a SWOT analysis (strengths, weaknesses, opportunities and threats) you should include a short and succinct description of what these may be for your business. Be truthful and clear, and outline any plans you have to combat your weaknesses or threats, as well as how you intend to benefit from opportunities.
There are plenty of in-depth guides to help you master writing a business plan, and seeking professional assistance may be a worthwhile investment, as your plan is a vital bit of documentation you need to get right.