You’ve got your idea, you know you’re going to start your business, so how do you take it from that brilliant concept in your mind to a fully functioning business? The first step is to write a business plan.
It’s the basis for any successful business and it’s an important first step before you get going. A good business plan is not only key for securing funding to your venture, it can also help you organise how it will all work, from the initial ideas to an actual company where you can sell your goods.
Here we look at everything you need to know about writing a brilliant business plan to get you started.
The first step in the creation of any new business is an idea. One that is original, inspiring and crucially one that will be profitable.
Once you’ve got your business idea, it’s then time to think about the business plan.
Creating a business plan is a critical step and it needs to be carefully thought and out created so you can give yourself every chance of success.
It should cover the following topics:
Description of your business
Strategies to achieve success
Sales and financial forecasts
A marketing plan
How much funding is needed
You need to pack a lot into the plan, but it also needs to be well structured and organised. It will explain every aspect of your business and encourage potential investors to part with their money.
It’s not something you can knock up in an afternoon either, it should take a few weeks to create, according to the experts at the Prince’s Trust.
To apply for funding from a bank, investors, or other source such as a government start up loan, you will need to have a business plan.
It can also help you to…
Organise your thoughts
Clarify your business idea
Highlight any potential problems
Outline and update your goals
Measure your progress
Convince customers or potential employees to support you
Your business plan needs to be structured and include all the relevant information needed. It can’t just be a jumbled collection of your thoughts.
A good place to start is to look at a sample business plan, and there are lots of free ones online including from the Prince’s Trust website. There is also a free business plan pack you can download which will guide you through every step of creating a plan.
Business planning is completely unique to your company but the following points are all worth including.
Executive summary and quick pitch - This will be the first part of your plan anyone will look at and perhaps the only section if they are busy. It needs to be succinct, organised and not too detailed. This is where you’ll lay out the basic facts and key points about the business and how it works. It’s a summary of your business, so you should write this part last.
All about you - Here is where you’ll explain why you want to start your business, what qualifications you have, and any relevant work experience, training and hobbies. Include a CV and give reasons for why your background will help you to make the business a success.
What will your business sell? - Now it’s time to talk about the goods or services you’ll be selling or maybe your business will be a combination of both of these - such as a cake company offering training courses. Remember that the person reading your plan may not be familiar with the items you’re offering, so give a basic introduction and avoid any jargon they might not understand.
Who will your customers be? - Customers make a business but who will yours be? It’s time to describe who will pay you for your products and to show you fully understand them. Include details about your target market but don’t be too vague. For example, if it’s a cleaning business, will you be hoping to attract local businesses and households first? If so, include this specialised group, rather than listing all the customers you’d like to reach eventually. If you’ve already started selling, include details about existing customers.
Who are your main competitors? - Where are your potential customers currently buying your product from, how many businesses supply it, and how well are they doing. This is your chance to show you’ve done your market research and you know who your competitors are and most importantly, how you’re going to be better than them.
How will customers pay and receive your products? - Moving away from the ideas and concepts of your business, you also need to talk about the nitty gritty of day-to-day operations. This includes where you’ll make your product and how it will be sent to customers. You’ll also need to include details about payment, will they pay in cash, by card, or by cheque? Can they buy directly from you or through a third-party website? To make sure you include all the details, imagine you’re making a first sale and walk through every step of the journey, from advertising the item to it arriving at your customer’s doorstep.
How much will it cost? - You can’t price your products until you know how much it costs to make and deliver them. You’ll also need to include things like paying for your time, any employees you have, renting out storage space, energy bills, insurance, and delivery costs.
How much money will you make? - Include a forecast of how many sales you would like in your first year, and how much money this will raise. You can then include a cost forecast, which shows how you will spend the money you’ve made in your first year.
What is your plan B? - Things don’t always go to plan so it’s well worth including details of a back-up plan. What happens if you’ve just launched your chocolate business, for example, and there’s a world-wide shortage of cocoa? While it’s impossible to predict everything, it’s worth considering any potential pitfalls that could derail your business so you’re as prepared as possible.
Be careful not to overload your business plan. Here are a few things to consider leaving out.
Jobs, experience, or training that isn’t relevant to your business
Vague or unrealistic financial projections
Non-specific research into your market and your customers
Anything unrealistic that over-hypes your business
Confusing or unplanned thoughts or research
You can download a free business plan template from the government’s Start Up Loan website or from the Prince’s Trust website. There are also lots available online and on social media - just be wary you’re choosing one from a genuinely successful business.
Every business plan will look slightly different and that’s because it’s completely specific to the business being created. While business plans are helpful for showing you what you need to include, it’s up to you to really narrow down the details of your plan and to make it as tailored to you as possible.
Here are some quick tips to follow for your plan:
Write the executive statement and quick pitch when you’ve finished your plan
Don’t include everything you’ve ever done, you don’t want to overload it
Be specific, use real-life examples and details of actual customers
Don’t over-exaggerate your financial goals, be realistic
Always check and re-check your figures
Avoid statements you can’t justify
Include potential reasons for your business to fail - and how you’ll overcome these
Business plans are crucial for any kind of business, and you’ll need to show one if you are applying for funding of any sort.
You will need to make sure yours it up to date and has relevant information in, so it’s worth reviewing it at least once a year or more regularly if there are big changes to your business, or to external factors such as the economy.
Aside from securing funding, they have other benefits too including the following:
Depending on the nature of your business, a business plan could be a good way to secure new customers. If it’s brand new, customers may be interested in where the business is going, how it’s funded, and how secure it is, before they part with their money. This applies to suppliers too, a company will want to know you will have the funds to pay them before they agree to ship your products, for example.
You may be running everything on your own, or you could be outsourcing jobs to other people or companies. If you’re hiring employees or even considering selling your business, you’ll need to be able to show how it works, how secure it is, how much money it makes, and its future.
Keeping the books balanced is critical for any business and within your business plan, you should have detailed sums showing how yours is funded. This will give you an idea of pricing for whatever you’re selling and also what to do with the money you receive. There are lots of questions you can answer by looking at these calculations, such as: Will it go straight back into the business, can you take a bonus, or will you put any extra money towards a new investment?
No one wants to think about their business failing but by doing this you can pre-empt things going wrong. A thorough and well-researched business plan should give you an idea of any areas you need to be wary of, and any potential problems that could arise.