How to write a business plan is a key element of starting a business, and the development of the plan should form the backbone of any business’s ongoing strategy.
Absolutely intrinsic to an application for funding, the elements of a business plan, if nothing else, allow the business owner to consider all the things which might impact on the business, and therefore be able to predict successes and failures and plan for them accordingly.
Business plan templates are available from numerous online. A business should choose the template which works the best for their kind of business, and fill it in thoroughly.
There are some key components which all business plans should contain and we will take you through how to write a business plan:
Business summary
This will outline the function of the business, whether it’s a product or a service, in the most simplistic terms possible. It will summarise the reason for the business starting, and may also mention the gap in the market that it is filling, as well as any unique selling points (USPs) that the business has.
Goals
Here the plan should outline what the business would like to achieve. The author should consider how they will measure the successes and failures of the business. Although monetary gain is key here, a business plan might also include a plan for employees, stock, turnover and/or premises. Whatever things are considered key goals for the business, they should be SMART – Specific, Measurable, Achievable, Relevant and Timely.
People
In this section, the author should consider who is going to run the business, and what attributes they have that make them capable of doing so. Here, you might want to consider a summarized CV of the key people who will be involved in the business. A lender or investor reading the business plan for example would want to have faith that the owners have the right skills and experience to run the business and make a success of it. This section should also consider the future staff of the company, and potentially a timeline of employees which reflect the SMART objectives.
Products and services
This section needs to elaborate on what the company will actually sell. The range of products and services may start small, and look to increase over time – again, this plan should be SMART, and consider all elements which could impact on the of the business. You might want to consider the pricing here, alongside the other products and services that are in the same market. Considering these will give you the opportunity to work out what will make the business stand out from the crowd.
Marketing
How the products and services are to be marketed is perhaps one of the most important elements of the business plan, and many businesses create a separate marketing plan that is then incorporated into the business plan.
Market research should be the first part of any business planning process. This will determine whether there is a gap in the market or a need for the products or services the business is going to offer. This can take many forms, but essentially a huge amount of internet research will cover most of it. If the business is to be location-centric, for example a café, it might be a good idea to quiz some of the local residents / business owners to see whether they see a need for the business. If a business is to be based online, there is less need for this, but in this instance online research is even more important.
A SWOT analysis and a PESTEL analysis can both be conducted as part of a marketing plan. A SWOT analysis allows consideration of the Strengths, Weaknesses, Opportunities and Threats facing a business. Similarly, a PESTEL analysis focuses on the Political, Economic, Social, Technological, Environmental and Legal implications for the business.
The marketing plan should consider who the audience is – who will the company market to? Who is the ideal customer? What kind of demographic are they in? Where would they like to receive marketing messages?
Branding is a key part of the marketing plan. A brand is not just a logo, it is a full spectrum of guidelines to which the company’s communications should adhere. This might include colours that the company uses, fonts that they write in, ways in which their logo can be displayed. Professional help getting this side of the business right should be a key cost factor in the set-up of a business. Done right, it will last forever. Done wrong, it can be extremely costly down the line, so the original investment is always worthwhile.
There are very few companies these days that don’t have a website, which is the universal shop front for a business to consider. Costs for this, and whether the website will be transactional (able to take orders and money) or simply informational, should be considered as part of the marketing plan.
Other collateral might also be considered as part of the marketing plan. Perhaps the company has a need for a printed brochure. Perhaps flyers might be useful to help get the message out there. At the very least, the Directors might want a business card to give out to potential customers. Perhaps exhibitions will be key to success, and therefore the company will need to consider investment in attendance, as well as banners, stands, and gifts.
Ongoing communications will need to be considered, and incorporated into the need for people resource. Social media is increasingly used to communicate easily and quickly to a wide audience, but takes time to manage. Similarly press liaison, including the launching of new products and services, will all help to get the company name out there, and should be incorporated into the initial marketing plan.
Premises
The premises for the business is probably one of the first things you’ve thought of when planning to launch the business. Perhaps initially it will be based from your home, with a view to move into an office or other location down the line. This part of the business plan should consider the sustainability of the initial plan and the future requirements in line with the staffing considerations, as well as whether there is any need for storage for the products you plan to sell. Costs for this should be incorporated into the finance section of the plan.
Finances
This is arguably the most important section of the plan, and poor financial planning can be key in the failure of so many businesses when they start out. Template twelve-month cash flow forecast spreadsheets are usually provided for free by loan companies/lenders, and provide a good starting point from which to consider every aspect of business income and expense. The numbers included should have been well considered, and erring on the side of caution is a good idea. Each number in the spreadsheet might be questioned, and so all need to be justifiable. The total sales needs to include the cost of sale, and hopefully repeat custom will decrease this cost over time. Consider revenue, footfall and conversion (in the case of retail), and then go back to the marketing plan to work out how to achieve this. Considering all these elements should help to make a sensible forecast.
