It’s one of the most crucial aspects to starting up a business but very few people actually understand what it is.
Mind you, you don’t have to be a new business to create a business plan since they should be reviewed regularly and adapted to the changing circumstances of your businesses.
And that’s what a business plan is in a nutshell: it’s the reason why you have created the business in the first place and it provides regular landmarks for your journey to success to measure how well you are doing.
Your business plan should have detail – and not just for you
Your business plan should also give the business structure, details of the product or service you are offering along with what it you want to achieve in business and exactly how you are going to do that.
The business plan should also cater for your future growth plans and where your customers are going to come from.
As mentioned previously, the plan should be reviewed on a regular basis to remind you of the reasons and hopes you had when you set out on this journey.
The same business plan can also be used to motivate members of staff and they will also see how you intend to become successful – and how you are going to share that success.
If you are looking to borrow money to set-up your business then you will definitely need a business plan – and it will need to go into some detail, especially on how you intend to spend the backers’ money.
It is also crucial that your business plan does not have to rely on jargon and should be as clear and as understandable as possible.
What should a business plan include?
Essentially you will need to cover four areas in your plan: the business itself, who the management team will be, how you will finance your business idea and how you plan to market it.
Begin your plan by giving all of the business’s particulars including who the current owners are and its legal structure. You don’t need much detail here since most people reading this, including you, will be more concerned about how you are going to operate and make a profit.
You will then need to detail your product or business and why people will buy it. If your business is unique then explain fully why this is so. If your business is dealing in something technical, then you will need to detail any patents or intellectual property which is owned.
You will also need to give some detail of your competition and how you intend to beat them. Here you will need to impress upon the reader that you know only understand the market but also your potential customers.
Understanding your market and customers will be highlighted in the section dedicated to the marketing of your business. Here you will disclose how you will offer your business to the market and how you will develop it in the short term.
Your business plan should also include all of the financial details that a potential backer might want to see.
If you have already begun trading then include these figures as well as loans and assets.
However, as a word of warning do not try to hype your sales figures and be realistic about your costs.
As for the management you should include a biography among the details for the key members of your team. Highlight any weaknesses in the team, especially if you are planning for growth as a potential investor will spot the gaps and ask awkward questions.
What is an executive summary?
Finally, you will need a summary, known as the executive summary which should cover no more than two pages – one page would be ideal.
This summary should also include your mission statement which wraps up in a few sentences what your business is about.
Indeed, anyone reading your business plan should be able to get everything they need from the executive summary and to help you focus on what it should have, think about this: it should be aimed at being an ‘elevator pitch’, that is the time it takes to pitch an idea in the time it takes to travel in a lift between two floors.
With a properly written business plan you should be able to achieve the success you are setting out to do.
