How to write a good business plan
Introduction
All good businesses start with a good idea. And turning that idea into a business requires a plan. Even if you don’t need to apply for funding, it is still important to write up a business plan.
A good business plan fills two needs. Firstly, it gives the business owner a space to write down their aims for the business, as well as the tactics and strategies they will employ to get there. This process will help to identify the gaps in their requirements, knowledge and experience, and to plan how they will fill those gaps. Secondly, if you are seeking funding, a plan gives the lender reassurance that the business owner has thought about how they will deliver a sustainable, successful business, and is not being complacent.
This is the roadmap for your business that you can keep referring back to, to ensure you are working towards your objectives, and that saves you time and money in the long run.
What needs to be in my business plan?
The business overview / executive summary covers what the business will do. This section should explain why you think there is a gap in the market for you and your product.
Objectives will describe how you and the business define success. These could be financial or sales targets, or could be related to customer feedback. However, the objectives should always be SMART (specific, measurable, achievable, relevant and time bound).
Defining the people in your business will help a lender to decide whether or not to take a risk on you. As well as your idea, you have to convince them that the people in the business are worth investing in. You should include detail on the management’s relevant experience and skills.
Products and services will explain what you are selling. Whether it is a product or a service, the more specific you are here, the better. If ready, perhaps you could include a price list and how your prices compare with your competition.
Define your market and who you are selling it to. This is crucial. The most innovative product in the world will not sustain a business if nobody knows about it! Who are your customers? How will you market to them? Some businesses create a separate marketing plan, but certainly a substantial marketing section within the business plan is a must. Show that you have conducted some market research and that your plan is based on evidence.
What will be your location? It is important to define whether you will have premises for the business or whether you will be working from home. Are the premises appropriate for the business, and have you taken costs into account?
Set out your financial information, as loan companies will often ask you to provide a 12-month cash flow forecast. However, plugging numbers in to the spreadsheet is only half the job. Those numbers have to be credible. You should be able to justify the figures in some detail.
For example, if you are developing a retail business, you might have estimated footfall in your shop, then you can estimate a conversion rate – what percentage of those people will buy? Then you can estimate an average spend per customer, and thus calculate the total sales forecast. Of course, not every business is a retail outlet, but there should always be some level of thought behind your forecasts, rather than just plucking a figure out of the air.
Conclusion
It can be daunting to write a business plan, but it is ultimately a working document that will keep you on the right track and keep the focus of your business and personal objectives in sight. By committing your ideas to paper, it helps you understand your business better and the actions needed for the business to develop. You will understand not only your business but the market as a whole, which gives you a better chance of long term success.
Review it – at least annually but we would suggest every six months. It really can make the difference between success and failure and it will pay dividends in the long run.
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How to write a good business plan
Organisations such as the Start-Up Loan Company...
