How to write a business plan
A business plan describes where your business is now, your aims for the future and how you expect to achieve them. In addition to obtaining finance, it can also help you to focus on your strengths, weaknesses, targets and performance.
Business plans should be clear and concise. Avoid waffle and jargon and be realistic about your objectives.
Key information to include:
1. Business overview
Begin with the aims and objectives of your business, where the idea came from and why you think it will work. Summarise the highlights from each section of your plan, with a focus on your competitive advantage, profit and cash flow forecasts, how much money you need and the prospects for investors.
2. Legal status and key personnel
Next, describe the structure of your business. Will it be a partnership, limited company or sole trader? Summarise the skills and experience you bring to the venture, introduce other key personnel and their credentials, and set out whether or not you intend to take on additional employees.
3. Details of your products and/or services
Now add a few more details about what your business does. If relevant, explain how products will be developed and any patents, trademarks or design rights you hold or intend to apply for.
4. Your target market
Describe the size and characteristics of your target market. Show how your product meets your customers’ needs and addresses their specific problems. Back up your assertions with research – you can access many databases, market reports and extensive market research through the British Library’s National Network of Business & IP Centres. This part of your business plan is also your opportunity to demonstrate the growth potential of the business.
5. Your unique selling point (USP)
What’s different about your business compared with competitors? Highlight the strengths and weaknesses of the competition and show how your product or service stands out.
6. Reaching your target market and securing sales
Detail your plans to promote and position the business. This could include how you will maximise your USP through branding. Clearly explain how you plan to reach potential customers, e.g. through advertising, PR and e-commerce.
- Ensure you demonstrate you have considered how to convert reach to revenue.
- What is your initial and ongoing sales strategy?
- How will you retain your customers? (For many businesses, it costs far more to “acquire” each new customer than it does to keep an existing customer).
- What do you anticipate your as your “customer lifetime value” (the typical total average spend per customer with your business)?
7. How and where your business will operate
Where will you run your business from? Do you need a physical operating base? If so, describe the location of your premises and the benefits it offers in terms of cost, transportation, distribution etc.
Where are your customers? How will you deliver your product or service? Are there any equipment, tools or processes that are essential to the smooth running of your business?
This is an opportunity to demonstrate a comprehensive understanding of how your vision for the business will be turned into reality.
8. Your financials
Set out the key financial information that will explain how you expect to make a profit, e.g. pricing and margins, projected sales, salaries and other overheads, your cost per acquisition of each customer, and cashflow forecast.
If you are seeking finance, how much money do you need and what will it be spent on? Be clear about how this funding will contribute to the success of the business.
This quick guide should help you to start thinking about the key ingredients of a business plan. You can find out more from your bank (most offer templates and guidance), an industry body (look the sector-specific support page), the British Business Bank which offers a free template, the British Library’s National Network of Business & IP Centres and The FSB.