First impressions are important, and your business plan is no exception.
It could be the first thing a potential investor or lenders sees, so it’s worth putting in
the time and getting it right.
In this video, I’ll explain when and why you should write a plan and what it should
include.
And I’ve even thrown in a bonus section with some additional tips and a few common
pitfalls to avoid.
When to write a business plan
It might be tempting to get cracking with your business plan on day one, but a 2018
study by Harvard Business Review actually found that businesses that waited between
six and 12 months to write a business plan were the most likely to succeed.
This is because you need to be flexible during the first few months of your new enterprise,
and a business plan can’t just be plucked out of thin air.
Among many other things, you’ll need in-depth knowledge of your product, market research
and a clear understanding of your finances, which you’re unlikely to have locked down
after 24-hours of opening shop.
Why should I write a business plan
A great idea alone will not guarantee success.
As well as acting as a sort of checklist to ensure you’ve nailed down the crucial details
of your business - like your strategy, year-on-year goals and crisis contingency plans - a solid
business plan inspires confidence in future investors and lenders, giving your business
the best chance of securing funding to be able to grow and innovate.
I’m not saying you have to dedicate every waking hour to your business plan, but it’s
worth dedicating several weeks to it in order to carry out competitor research, get input
from external stakeholders, investigate marketing options and even just to edit and proofread
the plan so it’s as slick and professional as possible.
Writing a business plan: Step-by-step guide
Every business plan will look slightly different because every business will have its own unique
needs, but the following outline should help keep you on track and ensure you don’t miss
out any important elements.
Section 1: Executive summary.
Your executive summary is arguably the most important part of your whole business plan.
It should give the reader a good overview of your entire plan, including what your business
does and how you will make it profitable.
If someone is busy, this may be the only section they read, so make it pop and, ideally, keep
it to no more than two pages.
As this is a summary of the whole plan, it can be helpful to write this section last.
Section 2 and 3 are for your personal and business details.
In section 3 you might also want to go into some more personal detail about you the business
owner like why you set up the business, your previous work experience and qualifications,
any hobbies or interests and any additional information that explains your motivation
for setting up your business and how you plan to develop your skills.
Section 4: Products and Services.
This is where you explain what your business is going to sell, create or provide and could
be physical products, services or both.
Section 5 is where you should go into detail about your customers.
By defining who will be buying your products or services you’re proving to those reading
your plan that there is a clear demand for what you’ll be selling.
Section 6: How the business will operate.
This section helps make sure you’ve thought of all the logistical and administrative requirements
to keep your business operating on a day to day basis.
Section 7: Marketing strategy Your business could hit the nail on the head
in terms of customer needs and expectations, but if nobody knows about it, it can’t succeed.
Effective marketing takes time and, often, money - rather than trying every possible
marketing technique from the get go, pick up to three methods that you think are likely
to be most effective at reaching and appealing to your customers.
Section 8 is where you take all your assumptions about the potential market for your business
and ground them in research, facts and figures.
Your market research should include desk research, customer research, competitor analysis and
in-depth analysis of your businesses strengths, weaknesses, opportunities and threats, otherwise
known as SWOT analysis.
Section 9 is your financial plan and should include all your operational costs and pricing,
your essential living costs, profit and loss forecasts and your cashflow forecast.
And, finally, section 10 is your backup plan.
Remember those threats and weaknesses in the SWOT analysis?
Where it’s a risk you’ve thought about or you get blindsided, it’s essential to
have contingency plans in place both for short to medium and long-term issues.
5 top tips
1.
Cut the waffle.
Be concise and write to the point using plain English.
2.
Be realistic.
Be upfront about any costs and potential weaknesses, banks and investors will see right through
overly optimistic projections.
3.
Do your customer and competitor research.
4.
Don’t gloss over your finances.
Crunch the numbers carefully, allow some budget for contingencies and be clear about how you’ll
make profit.
5.
Get someone you trust to check your business plan to check for any issues, inconsistencies
or confusing language.
What next?
For more information on whipping up the best business plan possible, click the first business
banking link below and download our PDF at the bottom of the page.
It’s packed with loads of useful tips and extra details on everything I’ve covered
in this video.
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Thanks for watching.