If you’re due to start anything, it’s always best to go in with a plan, and a small 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. Writing 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, writing a business plan should still be top of your list as you build your new venture.
Why write a business plan?
Without a business plan, the vision and future of your business will likely be exclusive to your head, and getting things down on paper helps you fully understand the logistical side of things. In the most basic sense, business plans are the stage which separates the idealistic fantasies from the solid business proposal. They can also act as a benchmark for monitoring current and future performance.
A good business plan helps you steer the direction of the company and details strategy for the coming years. You can set company objectives within a business plan and adapt your strategy over time as new ideas and market changes come to light.
Internally, your staff need to know precisely what they’re working towards. Stakeholders will also want some way to compare and contrast forecasted performance with 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.
What is a business plan?
A business plan is a vital document that provides all stakeholders with an overview and description of your business and plans for future growth and success. A well-written business plan will explain your primary objectives and business strategy, covering the following in a way that is clear to you, potential investors, key stakeholders 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 abd objectives 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. Business plans can and should be adapted to their target audience. While banks, investors and legal bodies may require a high level of financial detail, you ought to also have an easy-to-digest, simple business plan or executive summary of that plan that your staff can quickly and easily process in order to better understand their role in your company’s growth.
How to write a business plan
When writing a business plan, the structure of the plan should be easy to follow and the content simple to digest. There are sample business plan templates to help you get started. This guide talks you through all the sections and details that should be covered within your business plan.
Company summary
A company summary or executive summary lays out everything the reader can expect to be covered within the plan. Your business plan won’t mean very much unless you give the reader an introduction to the brand it refers to. The executive summary doesn’t need to be very long, but it should include key details like the date the company was founded, who key personnel are, business goals and objectives, what you are offering and what progress you have made.
Explain your products or services
When you write a business plan, you can use this section to make your small 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 how you differ from your competitors, what your USPs are and include ideas and strategies for addressing any challenges you foresee.
Current market and competition
If you know there are large names already dominating the market, you should 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? How will you rise above competitors to take a larger market share? 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 competitors.
Sales structure and marketing strategy
Outline your pricing structure and how you intend to market your product. This is also where you can further 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? Each objective, including all your marketing plans and their costs should be laid out clearly.
Management and personnel
This may 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, placing a rewarding training plan in place or having a comprehensive plan for ongoing employee development.
Explain your operations
Here is where you can include details of your current premises, production process and all the operations you use to make your business run smoothly and successfully, including IT systems and digital payments systems.
You can document how you will take and manage all payments and transactions using hardware and software, including POS technology, an Online Store if applicable, hardware such as the Square Reader for card payments and any invoicing software you plan to use.
When you write a business plan, ideas for business premise and equipment upgrades and expansions can be included in this section. Look at the advantages and disadvantages of the current set-up and how you plan to accommodate growth. Discuss supply chains and ideas for managing both current and future demand, as well as detailing all IT and management systems in use and potential upgrades as the business grows.
Financial performance
Writing a business plan involves detailed and accurate financial forecasts. This should cover the next two years at the least but can cover up to the next five years if the relevant data is available. The detail needed here depends on the size of your business. If you’re a small business, 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. You may want to consider enlisting the help of an accountant or finance professional to manage this step.
SWOT analysis
A SWOT analysis (strengths, weaknesses, opportunities and threats) outlines any potential challenges your business may face and identifies strengths that can be used to overcome these challenges. 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 utilise strengths and 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 piece of documentation you need to get right.