Whether you’re a new startup or thinking of expanding your already-established company, it’s important to create a business plan that represents your current circumstances, as well as your goals and ambitions. However, writing a business plan can often be an overwhelming process if you’re not sure how to approach it.
Fortunately, we’ve made things a little more straightforward. Reading on, explore what a business case actually is and why you should have one, the key areas you should cover, and tops tips around how to write a business plan.
What is a business plan, and what is it used for?
A business plan is, in essence, a document that outlines and describes your company’s objectives and the route you plan on taking to achieve results. It helps to offer clear strategy for current employees, encourages partners to join you on your journey, and helps you to secure funding.
Why is a business plan important?
In creating a business plan, you are formally mapping out what your company is, and demonstrating how you expect to make money and ensure sustainability. Additionally, business plans should offer key information around future goals, marketing material, and financial projections.
Why is it important to have a business plan?
Understanding how to write a business plan first begins with knowing why it’s important to have one. Once you have a grasp on the reasoning behind creating a business plan, you can make your case more effectively.
Writing a business plan makes it easier to spot potential difficulty
When making a business plan, it’s crucial to understand that not every step of the journey will be easy, and, during your time at the helm of your company, you are likely to encounter difficulty in part. This is normal and natural, so nothing to be overly concerned about.
With this in mind, it’s important to have each potential pain point outlined as part of your business plan template. It might seem negative to include such aspects, but addressing potential difficulty helps you to anticipate any bumps in the road and plan ahead of time to work around your weaknesses. This also demonstrates critical thinking, which is a desired trait.
Creating a business plan offers clarity around the state of your finances
A business case is much more than just a practical document outlining the general purpose of your company – you should also place strong emphasis on your finances. This includes projections and expectations, over the short and long term, and any calculated investment required to take the business forward.
Business plans make measuring progress more transparent
Well-written business plans help to structure a company’s principles and progress. Writing a business plan allows you to set attainable objectives, and stick to them.
This, inevitably, makes measuring performance a more straightforward process, and keeps you and your roster of employees accountable when it comes to reviewing targets.
Business plans formalise strategy
Creating a business plan gives you the opportunity to lay out your strategy and formalise your ideas, making it easier to take the appropriate steps to move forward. It proves to investors that you have a considered route to success, and you understand the market you’re interested in, the audience you’re targeting, and the material required to pique interest.
Writing a business plan ensures the whole company is on the same page
Business plans aren’t just written for the benefit of the CEO. In fact, your business case should be used as a guide across your entire company, as a resource that all employees can refer to, from directors and managers to entry level graduates. Its purpose should be to keep the whole company on brand and to ensure everyone is pulling in the same direction.
Business plans make explaining your model more straightforward
While you undoubtedly have a passion for your business, it’s sometimes difficult to convey the logistics without a tangible aid. A business case allows you to sell your ambition in a digestible format for investors.
Strong business plans also help to attract experienced management to your business, which can lead to faster growth; if you can sell a director or senior professional your business plan, they’re more likely to engage and join you in your exciting endeavour.
How to write a business plan: What to consider
You now know why writing a business plan is important, but, if you’re not sure what elements to include, it can still feel like a monumental task. Fortunately, we’ve outlined how to make a business plan, with each step ordered accordingly. So, what does a business plan look like?
How long should a business plan be?
The best business plans are to the point. After all, you’re trying to encourage a prospective investor or partner to get excited about your proposition – a long and tedious document will drive them away! So, only cover the necessary details.
But what is included in a business plan? We’ve outlined a business plan template, designed to help you craft the document with ease.
How to write an executive summary for a business plan
Business plans should always be introduced with an overview, so, when making your business case, make sure to start by summarising the key takeaways of your proposition. Consider the following when writing a business plan introduction:
- Business plans should be written in a concise and engaging manner. This is your chance to make a positive first impression.
- What sets you apart? Consider what it is about your business that makes you stand out from the competition, and lead with this.
- Offer a nod towards each aspect your plan is going to cover, including the marketing and financial elements of your business case.
- It might be obvious, but keep your summary positive and leave any pain points until the main body of your business case.
How has market research driven your decision making?
Writing a business plan is your chance to prove you understand your market. Use this section to explain your research, touching on industry trends and how your business model stands out from the competition:
- Go into detail about the characteristics and personas of your targeted customer base, including how you plan to market your company and what your growth timeline is.
- Demonstrate that you understand what influences consumer decisions.
- How is the industry or market evolving, and how do you plan on catching customer attention as the landscape changes?
- What is your competition doing well, and how can you capitalise on their weaknesses?
What are the strengths and weaknesses of your business case?
It’s easy to assume that business plans should only highlight a company’s strengths. However, including and reflecting on your weaknesses demonstrates that you’ve fully considered the risk of the endeavour and still have confidence in your model.
In fact, a business case that doesn’t reference any risk can come across as rash or ill-prepared.
- How will your strengths help you overcome your weaknesses?
- What potential pain points should you be anticipating, and how can you appropriately address risk?
What is your business strategy moving forward?
Of course, your business plan should expand on your overarching strategy. How will you run the business and make it a success?
- What is your marketing strategy?
You will have already outlined your industry research, and where you position your business within the market. However, this is your opportunity to go into more detail around promoting your business case, including your proposed sales strategy and the marketing channels you plan on pursuing.
- How scalable is the business?
You should have an idea of the direction you plan on taking your business, in terms of growth. This element of your business case should cover any arrangements in place, what challenges you expect when it comes to expanding, and how you plan on tackling difficulty.
- How will the business be run?
When you write a business plan, it’s important to include details around the practical, day-to-day running of your company. Try to answer each of these questions in detail, within your business case: Who will be responsible for operations? Will you be running the business alone? What are you plans for hiring staff?
How do your present and future financials look?
This is your opportunity to take a closer look at the numbers. While you should be offering short and long-term projections, don’t speculate; keep your estimates realistic and accurate, and back them up with raw data. Faulty financials can be the downfall of your business case, so make sure to always include:
- The cost of goods and projected sales
In short, this area of your financial report looks at raw costs and projected sales, to assess value. Whether you’re selling a product or offering a service, you should list the associated costs attached. Additionally, you should predict future performance based on the number of units you expect to sell and their sale value.
- Profit and loss
Using cost and sale data, as well as information around your business’ running costs, you can create a timeline outlining your anticipated profits and losses. Depending on your position as a company, you can write a business plan profit/loss forecast for as far as it’s feasible to predict performance.
Make sure to include an appendix for more thorough detailing
The final element of your business plan template should be the appendix. This allows you to cover certain aspects more comprehensively.
An appendix is crucial in any business case because it allows you to elaborate on things that are perhaps too detailed for the main body; if a reader is interested in learning more about your market research, financial forecasts, or staff profiles, they can easily find more information in this section.
Within your appendix, you should include any additional tables, graphs, or notes, each clearly signposted throughout your business case.
Top tips for writing a business plan
Knowing what makes a good business plan is more than just following a formula. To write a business plan that excites and impassions, you should take the following into account:
Who is the business plan for?
It can be easy to lose sight of why you’re making a business plan. For instance, is your business case for company reference or are you hoping for an investment? Determine who the document is really for, and ensure your business plan format follows this thinking.
Keep your business case concise
Go into as much detail as is necessary to sell your business, but be careful not to labour your points. Making a business plan that’s concise and accessible should be your key consideration; if you do fall into the trap of writing a business plan that focusses too heavily on the miniscule, you run the risk of losing your audience to boredom.
Similarly, use simple and easy-to-understand language when detailing difficult material; bear in mind that not everyone reading your business plan will have in-depth industry knowledge.
Your business plan format should be polished and well-presented
The first thing a potential investor or partner will consider while perusing your business case is the presentation. Break elements up into appropriate areas, each clearly highlighted with relevant headings, and ensure there’s a clear direction to your proposition.
Similarly, don’t underestimate the helpfulness of graphs and tables to emphasise, or even make your point. ‘A picture paints a thousand words’, so, if you can explain something visually, don’t spend paragraphs or pages rambling on.
The best business plans offer evidence for each point
Whenever you outline a point while making your business case, always try to back it up with evidence, such as relevant stats or third-party support. This is especially important if you’re hoping to secure investment or a partnership, or you’re entering a particularly competitive market.
Always keep your predictions as realistic as possible
We’ve touched on it already, but don’t be tempted to inflate your forecasts or undercut your costs across your business case. An experienced investor will be able to see through your charade, anyway, so it’s better to be truthful about your finances.
Write a business plan that’s professional
Even if you only intend to circulate the document internally, writing a business plan in a professional manner will always stand you in good stead. There are two main benefits to taking this approach, when formatting your business plan template:
- As a tangible representation of your brand, a strong and well-written business case helps to set the tone for the way you want the company to perform.
- Even if you don’t anticipate requiring external investment, ensuring your business plan is presented in a professional manner allows you to quickly repurpose it without having to spend company time redrafting.
Taking the leap into the world of business is an exciting time for any young company, but it’s important that you equip your brand with the tools to succeed. Now you know how to write a business plan, discover the next steps in moving your company forward, and if you haven’t already, register your own unique business domain name.