A business plan is a comprehensive document that outlines the objectives, goals, strategies, and operational details of a business. Think of it like a roadmap for entrepreneurs and anyone else involved in the business. The exact nature of it will vary from one business to another, but a business plan will normally cover:
Concept and aims
Products and services
Target market and potential users or customers
Marketing and sales plans
Your business plan will be a really important tool in guiding the decisions you make about your business, helping to attract investors or lenders, and giving a clear understanding of how the business will operate and be successful.
Why do businesses need a business plan?
Outlining your goals, mission, and vision helps you plan how you want your business to be in the future. This then helps you to think strategically about your business by drilling down into things like what the market and your competitors are doing. It’s also a chance to properly identify the types of people who will be buying your product or using your service, and how much you need to charge.
Investors and lenders often require a business plan before committing funds.
Your business plan can also help you allocate resources more effectively. In other words, how much money is required for your business to succeed, and do you need to take on any extra staff? This is crucial for budgeting and financial planning.
Identifying potential risks in your business
Another real benefit of a well-written business plan is it helps you manage and mitigate risk. It will give you an opportunity to identify areas that may be vulnerable in some way, and decide what you can do to reduce the risk or manage future situations.
Understanding the marketplace
Your business plan will include information about who your potential customers and competitors are, which will help you develop effective marketing and sales strategies. This includes understanding customer needs, identifying competitive advantages, and outlining promotional activities.
Methods, tasks, and projects
A business plan gives an insight into the day-to-day operations of your business, including key personnel and operational processes. It can also help you devise a benchmark for monitoring and evaluating the business’s performance.
Comparing your actual results (such as management accounts) to the projections in the plan will help you identify what’s going well, and what may need some adjustment.
Don’t forget that while a business plan sets a direction, it will need to be revisited often and updated as things change. You can then adjust your business strategy over time, based on things like market dynamics, technological advancements and other external factors.
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What should I put in my business plan?
Every business plan will be different and the specific content may vary based on your industry, target audience and business model. However, as a guide here are some of the important things that are well worth adding to make your business plan as professional and effective as possible.
Briefly summarise your business idea, mission, and objectives. Highlight key points from each section of the business plan.
Provide an overview of your business, including its name, location, and legal structure. Describe your products or services and the problem they solve.
Market analysis is the process of researching how you you will attract customers or users to your business. This can involve looking at competitors, or even businesses in an unrelated field that do something particularly well and which you want to replicate.
Identify your ‘target market’ – the people or businesses that you think are most likely to become customers – and what barriers you might face. This will help you prepare a more reliable marketing strategy.
Marketing and sales strategy
Describe your sales approach and marketing plan, including the marketing channels and methods you will use now and in the future. Explain your budget for this, and forecast the sales you expect to make as a result.
Organisation and management
Outline your business structure (such as whether you will operate as a sole trader, partnership, limited company, or something else). Introduce key team members, their roles, and qualifications.
Detail the features and benefits of your products or services. Explain your unique selling point (USP) and competitive advantage. What makes you different to other people who provide similar products or services?
Include a detailed financial forecast for the next 3-5 years. Project income statements, balance sheets, and cash flow statements (more on this in a minute). Include assumptions and highlight key financial metrics – and if you’re looking for investment, be clear on your figures.
Identify your business’s strengths, weaknesses, opportunities, and threats.
Describe how your business will operate on a day-to-day basis. Who are your suppliers, and why have you chosen them? Do you need to consider the logistics of storage and transport, or find space for equipment?
Include additional documents, such as the CVs of key team members, market research data, or any other supporting materials.
What financial planning should be covered?
It’s crucial that your business plan includes a comprehensive financial planning section that outlines how much revenue you expect to make, as well as your expenses and profitability over a specific timeframe – normally at least three to five years.
It’s worth taking steps to explain what risks your business faces, and how you plan to mitigate them. It will help answer questions before they arise, and shows potential investors and collaborators that you’re being realistic in your approach (so they’re more likely to want to get involved).
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About The Author
I'm an experienced and fully AAT and ACCA qualified accountant, who is enthusiastic about helping business owners succeed. I also love cooking and needlepoint (at different times!). Learn more about Beth.