Writing A Business Plan

When you have a great idea for a business, a business plan is a place to put all your ideas, plans and projections, giving you a practical base on which to ensure the success of your venture. Simply put, this is a written document which acts as the cornerstone of any business, organization or agency in all sectors, covering objectives, strategies, sales, marketing, and financial forecasts.

A business plan will help you clarify your business idea, see where potential problems lie, sets out your aims and ambitions as well as measuring your progress. It is also something that will be required if looking for an investment or taking out a business loan.

Getting started

A business plan is not just to get you started in the business, but to help in the years ahead, so keeping it brief makes it much easier to use on an ongoing basis.

Even if your business plan is solely for your own use, write it as though an outsider needs to read it. Keep the plan short and simple. More in-depth information, on which you have based your plan, can be added as appendices at the end or under separate operational or marketing plans if this is a big business.

Information gathering

There is some basic information you need to pull together before you start writing a business plan. Detailed financial forecasts are vital, whether you are taking over an existing business or starting from scratch. Use current market research data to confirm what the business plan says. If you are looking for external funding, including the curriculum vitae for all the key personnel. Provide literature about your product or technical specifications and above all be honest and realistic. Over-optimistic financial forecasts can lead to a cash-flow crisis and will most certainly be spotted by lenders, investors and business partners.

Get writing

Start with an executive summary of what your business does or will do. This gives a purpose to the business plan that acts as an incentive to the full text.

Business history and products

Give a short trading history of the business and the progress it has made. Provide evidence for your claims, either in the appendix or on request. If this is a new business venture, include your background in the industry and work has already been done to launch the business.

Describe your product or service in layman’s terms where possible. Explain why your product or service is different from what is already available on the market. Include a risk assessment related to what might go wrong and what you would do. For example, if your major supplier or customer goes out of business.

Trade and competition

Describe your target market, your competitors and explain how much market share you have or are aiming for. Provide details of trends in the market and the reasons for these. Detail the outlook in the market and profile how existing customers have supported your business and what you expect in the future. If a new start-up, include any committed customers retained before starting. Include your main competitors and show what advantages and disadvantages your business has in comparison.

Marketing and sales

Detail how your product or service fits in the market place, for example, is it a specialist product for a particular market or a mass-market product. Add the unique benefits on offer to your customers, for example, product reliability and excellent customer service.

Explain your pricing policy, showing where profits will be made and where it may be possible to increase margins or sales. Also, include the processes you will use in marketing, such as direct marketing and advertising, both digital and analog.

Detail how sales are made, either directly to the customer, through retailers or agents. Include the average sales value and estimated repeat orders.

Management and personnel

Show how key areas of business will be covered by a management team and staff. This is to include management of production, sales, marketing, finance, and administration. Explain how the business will deal with any skill set not covered by the management team. Include a recruitment and training plan to include timeline and costs. Check out employee retention, salaries, sales, and productivity in the same or similar industry and compare efficiency rates between the two.

Operations

Detail current business premises or explain what is needed and what long-term commitment to property is proposed. Also include production facilities or other equipment in use by the business, plus any changes necessary to cope with current and forecast demand. List your key suppliers and all management information systems in use for collecting information for accounts, sales, stock control and quality control. Confirm how these systems are managed, the cost of this management and of the necessary upgrades.

Financial performance

If you have the details, provide details of the company’s finances over the last three to five years. Provide forecasts for the next three (or even five) years based on all the other information included in the business plan. A small business may only need sales, profit, and cash flow budgets. Consider including a cash flow forecast for sales 15 percent lower than anticipated, or conversely, 10 percent higher. Add a contingency element onto the funding requirement, which should be between 10 to 20 percent.

On the forecast, add the profit margin on each product, how long it takes to collect payment from debtors and what credit suppliers offer. This helps decide the best financing services, such as an increased overdraft facility or a long-term loan. Add the costs of financing services in the plan — factor in the additional costs of this financing in your plans.