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Guide to writing a business plan
Do you need help making a business plan?
For many people, the idea of writing a business plan can seem intimidating and confusing. However, when you get into it, knowing how to write a professional business plan isn’t as difficult as it sounds.
Sure, it might take a little bit of thought and planning, but the results you get from a good business plan are invaluable. It’s a handy tool to clarify your ideas, showcase your brand's potential investors, and gain support for your venture via focused, practical support.
It’s not difficult to see why so many businesses make a plan, even those who aren’t searching for funding A business plan can help to sharpen the existing ideas in your head and give you a clear vision for the future.
Your business plan is designed to take your idea, explain the vision that you have for your project, and tell people anything they would need to know. It provides a comprehensive set of facts and figures about your project, giving people the information that they need to make an investment or work with you. It looks at things like customer segments, a competitive analysis and other important things.
Investors can use this information to help work out if you’re a business that they want to invest in. It also helps you to focus on your project and show the planned development behind your idea. To help you out, we’ve put together a little free business advice and a checklist of the different types of information your plan should have.
Follow our step by step guide to writing a business plan…
1. An overview of the projected business
This part of the business plan is a company description which covers your business proposal and shows investors the abridged version of what you’ve put together in a traditional business plan.
You’ll want to add your mission statement too. It’s typically the last part of the business plan to write, but it needs to be put on the first page of the document you create.
Think of this as your introduction - it is meant for people who know nothing about your business to learn what you’re trying to do.
The executive summary shows the main key points of your business plan. Specifically, it’ll talk a lot about what you’re trying to provide or sell to people, why your business is a viable prospect, what kind of market you’re looking at, how your management is structured, and your own commercial history on top of that. Clearly, that’s a lot of considerations, but the trick is making it fit on a single page - that’s the tough task.
As an overview, this is important because it’ll be used by banks and potential investors alike. You can use this as the basis for an in-principle judgment of the business plan, and then you can look at the facts and data you’ve collected to evidence your judgement.
2. Provide an account of your business idea
The first thing that you can do is explain the background for your idea - talk about the events that led up to you having the idea if it’ll help your case. You can talk about how long it will take for your plan to work and the measures you’ve already taken to prepare for it beforehand.
It’ll also help when it comes to showcasing previous experience, and you can position yourself as either the owner of the business or one of a few people making the important decisions.
Ensure that you give your audience a clear understanding of what it is that you’re trying to sell and the services you want to offer in the business plan.
You should talk about why it’s such an original product and what helps to separate it from the crowd - this is important for convincing an investor that your product is worth investing in. You should also do a SWOT analysis.
We recommend that you are honest about anything you’re not sure about. Business planning needs to be transparent about the challenges that it will face, and an investor will appreciate this honesty moving forward.
You should talk about the obstacles you might face, such as a change in technology and regulations or simply just evolving expectations from customers.
3. Assess your markets and competitors
You need to perform a proper evaluation of your market within a business plan and target the right people to succeed. If you want to do well, you’ll need to think about things like the age group, location, and other criteria.
You can use this market analysis to build up a profile for your ideal customer and look at their preferred trends and buying habits. Have any customers already shown interest in your product and what you do?
A few key features to think about are as follows:
Who are your competitors, both directly and indirectly?
Where do your competitors get their supplies or goods from?
What are the strengths and weaknesses of your competitors?
You should try and present these facts and figures in conjunction with a reason why target customers should make a purchase with you instead. For example, how will you respond to your competitors reacting to your entry into the market?
You need to demonstrate the range of your research by delivering a well-thought-out plan and then explain why you can succeed despite the challenges you’ll face.
4. Explain your marketing plan
The best business plans have a marketing plan in place to try and work out how best to appeal to customers and target their needs.
Here are a few things you’ll want to think about in your marketing strategy:
How are you going to position your services or products, and what will be their prices, quality and overall care?
How will these prices compare with your competitors?
What will your approach to sales look like?
When you market, will it be done face-to-face, through an agent or representative, or online?
What are your main sales points?
What kind of realistic delay will there be between placing an order and delivery?
Will your business be able to secure repeat customers?
What tools and methods will you use to identify people who might be attracted to your product? Is there already a clear target audience in mind?
What kind of marketing methods will you use - internet, traditional advertisements or your website?
How profitable will each part of your business be?
You’ll likely need more than one service and type of customer to achieve success within your industry. Look at different types of outlets with regards to sales, costs and profits. You should specify where you expect the best profits will be made and the sectors in which you expect the profits could be increased.
Your services and intangible products, like, for example, computer software, are naturally harder to market, so you’ll need to show a business plan to overcome this.
5. Management
If you’re going to succeed, you’ll need a well-designed management team. It’ll help people to have more faith in the business when it’s clear that there are people in charge who know what they're doing.
You can start this process by talking about some of the skills and experience that each member of your team has. What does each person do in the management process? You should talk about what you consider to be your strengths and weaknesses, as well as how you’ll overcome potential weaknesses.
You’ll need to provide a brief account of the career history and overall competence of the individuals in your team. You’ll need to outline who will manage the key responsibilities and roles for each part of the company.
Here are a few things to keep in mind:
What kind of management information will you offer about your sales, accounts and stock?
Will you use your senior executives within the company to train management staff, or do you expect them to have certain skills already?
It’s going to be important that you showcase a commitment to the project you’re part of and also demonstrate that you have the skills necessary to secure the support of investors and banks.
Talk about the specific time and money that your staff have put into the business and ensure that everyone knows how they’ll be compensated and what they’ll get for their work.
6. How the business will operate
This is the section of the business plan where you’ll need to talk about your business and how it performs. How do you envision your customer ordering a product and having it delivered? Essentially, it’s time to think about logistics.
You should talk about what types of facilities that your business will have and how it will fulfil orders for the customer. You should talk about where your business is based and if this has any benefits - i.e. being positioned near customs to deliver international orders for cheaper.
Other logistical considerations include the following:
What devices or equipment do you need for the running of your business?
What does your production or storage capacity look like? How long will you store products, and where will you put them?
What will you need employees to be able to do in terms of skills? Will you provide them with in-house training to do things a certain way, or are you searching merely for qualified professionals?
What kind of supplier will you work with? How did you decide which suppliers are right for you, and what information contributed to that decision?
7. Finance
The next step in the business plan process is to think about how much these preparations and arrangements cost and what prices you’ll need to set for customers to keep your business turning a profit. Financial forecasts are difficult for people who don’t like working with numbers, so reach out to another professional if you need to do so.
You should start your financial plan with a realistic sales forecast within your business plan and showcase the other calculations as part of that process. We recommend that you approach the situation like this:
Give a breakdown of your sales into the separate elements that make it up, from the sales of specific products to the different customers you’ll supply products to.
Try and estimate your cash flow to give a representation of how much money you will expect to go in and out of your bank accounts. You should also try and predict when money will move.
Demonstrate how much capital you’ll have in the bank at any given point - investors will want to know how much money is in the bank at any given point to reassure themselves that the business can survive a crisis.
Talk about the issues you may experience which could impact your overall cash flow. This can be things like your income, and its timing or your staff wages and their payments.
Try and present an idea of when you expect your income to rise and how this will happen over time.
Create a profit and loss forecast. This will be an indicator of how your business will grow and develop over time and will give some ideas as to your yearly forecast for the first few years that you trade. Will you have multiple revenue streams?
Finally, try and give a proper estimate of the exact turnover you’ll need to break even as a company. If you’re looking to make a profit margin of 30%, how much money do you need to make to achieve this? How many products do you need to sell?
Bigger businesses tend to have a projected balance sheet in their business plan to compensate for the fact that their profits and losses tend to be quite ambitious. You’ll need to take a look at your finances at every stage of the process, and it’ll help investors to see what you bring.
In some cases, your forecasts will turn out to be incorrect - if this is the case, they’ll need revising later on. However, you should make a note of all the important factors in your business, like the prices you’ll expect to change over time, the sales you expect, and the likely changes to the company in the future. If you need help, most banks have a small business adviser.
Your finances should include a loss statement and cash flow statement. You also need a cost structure. It doesn’t matter if you’re a tiny company - even small businesses need to plan ahead.
8. It’s important to be realistic
Lots of businesses make optimistic projections for their future in a business plan, and investors are fully aware of this. They’re accustomed to dealing with overzealous companies who are striving to look as capable as possible. You need to ask yourself a number of questions during the writing of your business plan to make sure you’re being honest about your company:
When are you going to start trading?
You need to be honest about when your business will start.
You may miss out on a few months of the fiscal year, and this can impact profits - your plan should reflect this.
How long will it take for customers to notice you?
One of the biggest mistakes you can make is assuming your customers will know who you are from day one.
It may take time for them to trust you and buy products regularly. This will impact sales.
How much time do you give for selling products?
Selling products takes time, and it can be a lengthy process. You need to work out how much time you can afford to give to selling.
You also need to consider things like how long it will take for each new product to get up and running.
How many sales will come from interested parties?
Many companies overpredict how many sales will come from their interested target audience.
You need to be realistic about the number of people who are likely to go from interested in your product to buying it.
What are your profits likely to be?
You need to consider your profit from each sale.
This is the figure that comes after costs for the delivery, shipping, marketing and other factors. It won’t be as high as you’d hope in a lot of cases.
Can you rely on repeat orders?
Most companies dream of having fleets of repeat customers who fill their monthly quota of sales.
The reality is different. You need to be realistic about how many new customers you should aim to find each month.
What is the delay between sales and payment?
You’ll quickly discover that not all customers are keen to pay instantly.
You need to decide if you’re going to insist on payment in advance of the product or give a window to pay for goods.
What will your income look like?
You need to be realistic about your monthly income in your business plan, especially if you’re a small business.
Whatever you want to make is irrelevant - you need to be honest about how much money you actually take in profit each month. Your financial projections need to be accurate.
Write A Business Plan Today
Creating outstanding business plans is a challenge for any business. It is paramount to seek expert help from a team of professional writers.
We write business plans for companies across the country and would be happy to help you. We can give you something better than a business plan template, sort out your financial projections, write the executive summary, and handle all of it for you. You don’t have to know how to write a professional business plan - we already do.
Contact us today and find out what we can do for you.
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