Writing a business plan
Whether you are a new or established business, you should have a constantly evolving business plan in order to help you define your current objectives and your strategies for achieving them. Your business plan should describe where your business is now and your hopes and aims for where you want it to be in the future.
Business owners often make the mistake of thinking that their plan is solely for obtaining finance. However, a good business plan can do much more. It can help you to:
- Clearly identify and communicate your business purpose
- Bring together your ideas and research into a structured format
- Identify any further research that is required
- Outline the strengths and weaknesses of the management team
- Set targets and objectives
- Monitor your business’ performance regularly and frequently mitigate issues and spot opportunities to leverage your finances more effectively
Your business plan should provide the evidence that your venture has the potential to be a success. It should contain:
1. An overview of your business
What is the basic idea? Where did the idea come from? Why do you think it will work? The overview should summarise the key points of your plan, showing the highlights from each section and focusing on your competitive advantage, profit forecasts, how much money you need and prospects for investors.
2. Details of the business’ legal status, key personnel, aims and objectives
One of the first considerations before starting any new business is to decide what form it will take.
Should you structure your new business as a limited company or sole trader? What impact will your decision have on your tax situation? If you set up a business partnership, what are the must‐have components of a partnership agreement?
What will you be personally liable for, and will you be able to take on employees?
Each business structure has different benefits and drawbacks, so it is important to learn what each of them has to offer.
3. Details of the products and/or services your business will provide
Effectively, what your business does. It should cover the type of business and what sector it is in, when you plan to start trading, what makes your product or service distinct, how products will be developed, and any patents, trademarks or design rights you hold.
4. Details of your target customers’ characteristics and estimated numbers
It is important to choose your target market carefully. Don’t try to sell to everyone. Focus on a specific customer group. Think about the needs of these customers and how your product meets these needs. Back this up with research.
5. An assessment of your competitors’ strengths and weaknesses and how your business is different from the competition
How does your product compare with what’s already on offer? What will make you stand out? Do you have anything the competition doesn’t have? Your competitors may react to your entry into the market by reducing prices or improving their marketing or service. Think about how this could impact on your plan
6. Details of how you intend to market your business
The nitty‐gritty on how you will sell your product or service. Detail the pricing, margins, promotion and positioning of your product, how you will reach your customers, and your chosen sales method which could include advertising, PR and trading online.
7. How and where your business will operate
Location can be key to the success of a business. The decision may be straightforward or you may wish to weigh up your options. Factors to consider include cost, customer traffic, transport and distribution and staff. Will you need premises, will you be working from home and/or will you be trading online?
8. Your financial requirements, including how much money is needed and when it is needed
You will need to show:
- What capital you need
- Any security you can offer lenders
- How you plan to repay loans
- Sources of revenue and income
- The prospects for investors or lenders
In addition to this, you’ll need cashflow, profit and loss, and sales forecasts. A smart business plan will also detail the assumptions behind your forecasts and risks that might affect those figures.
Download the factsheet in PDF format - here.