Sometimes even the best laid plans can go awry, but creating a business plan could help you get your company off the ground. Our guide will explain why business plans are important, plus some words of wisdom on how to make a business plan.
What are business plans?
A business plan is a document that outlines the vision and unique selling proposition (USP) for your company. As we’ll explore later, your plan might include your goals for the business, information about key personnel, and details about your products and services. Some entrepreneurs decide to write a business plan before they launch a venture, but you can also rewrite a business plan over the months and years of running a company.
Why business plans are important
Let’s run through some of the reasons why you might decide to write a business plan:
- Attract investors. A business plan could be a valuable tool in your armoury if you’re looking to get investment in your company. An investor can review a business plan to decide whether your firm’s future growth plans are realistic.
- Establish benchmarks. A business plan is a chance to define what success looks like so that current and future members of your team have a roadmap to follow.
- Identify problem areas. Your business plan gives you the opportunity to present your ideas to others before you implement them. Getting feedback at an early stage means you may be able to tackle problems proactively.
- Develop ideas. A good business plan could help you decide which ideas are working, and which ones you could be better off parting with.
- Attract new talent. Putting together an eye-catching plan for your business is one way you could impress applicants, as well as partner companies whose vision may be aligned with yours.
Is a business plan necessary?
There is no rule that says you have to write a business plan, and ultimately it’s down to your personal preference and the needs of your business. Some argue in favour of business plans as an opportunity to road-test ideas and make ‘mistakes’ before implementing them in the real world. Others argue that business plans are time-consuming to write, become outdated quickly, and often won’t get read by the intended audience.
Whether you decide to write a business plan or not, it might be the case that the quality of the plan is what counts – putting together accurate figures, for example, may reduce the chances of an investor questioning your numbers at a later date.
How to write a business plan
Once you’ve decided that a business plan is necessary, below are some of the main ingredients you may wish to include in your mixing bowl. While this isn’t an exact template for your business plan contents, it may provide some inspiration.
1. An executive summary
First impressions count, and your executive summary is a chance to list the key takeaways you want readers to remember most. Not everyone has time on their hands, so getting your summary down to a maximum of one page could be a good way to grab attention. Some entrepreneurs like to write this section last once they’ve nailed the other parts of the business plan.
2. Basics about your business
Once you’ve broken the ice with your executive summary, you may wish to introduce the reader to the key information about your business. This could include your business name and main personnel, the company location, and how you are structured – as a limited company or partnership, for example.
3. Competitor and market analysis
Demonstrating that you’ve done your homework about your market, as well as your industry competitors, may help inspire confidence among any investors who read your business plan. In particular, you could include information about the size of your target market, and a summary of any precedents set by your competitors; for example, if you’re opening a bar, you could mention a successful promotion hosted by a local competitor.
4. What you offer
In this section of your business plan you can describe your products and services, including any intellectual property, trademarks and patents you own. It’s also a chance to highlight how your products are made, whether that’s in a factory or by hand.
5. Your finances and operations
Here, you can cover information about your finances, and (separately if you prefer) the nitty gritty of how your business will function in practice. The finance section could include details about your running costs, projected sales and the capital you already have.
When covering your operations, you may wish to give an insight into the finer details that make your business tick; this could include a summary of your facilities, supplier relationships and other information like product inventory requirements.
Common reasons why business plans fail
Obviously, we’ll have our fingers (and toes) crossed that your business venture is a spectacular success from day one. But for all of us, the road to success can often mean understanding what not to do. Here are some possible reasons why business plans sometimes fall short:
- Bad ideas. We hate to say it, but there’s a reason why no one’s ever invented rocket-powered swimming trunks. All the business smarts in the world won’t be able to cover for an idea that doesn’t have a market.
- Flawed finances. If you’ve left out valuable information from the finance section of a business plan, whether that’s cash flow information or tax and VAT liabilities, it may get scrutinised by investors.
- Spelling and grammar errors. Typos cost businesses millions in lost revenue every year, so making sure your grammar is golden – even in a business plan – could give an air of professionalism.
Want to read more?
Once you’ve mastered how to write a business plan, there are loads of next steps to think about – from growing your team to keeping customers happy. Tyl Talks is our content hub where we explore all these issues (and more) in our articles and guides. Here are some starters for ten:
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