Creating a business plan is one of those rare things, rather like home fermenting or long division, which sounds more difficult than it is. Success is entirely possible by following a few core steps. Yes, you can throw in extra bits for a bit of spice and colour, but getting the basics absolutely spot on is what counts.
And by ‘attractive’ we don’t just mean pretty to look at, although this can help, depending on your audience and sector, but tempting to an investor, bank manager or whoever else you’re hoping to secure support from.
As you’re creating your plan, keep referring to those three key points. Ask yourself the same questions, however tough, over again around clarity and how your business plan is leaping off the page. It’s crucial that someone can pick up your business plan, read it through and come away with only a few questions (or, of course, lots of excited ones). They need to ‘get it’, without you being in the room to explain every convoluted detail or vague statement of fact, however clear these might seem to you.
Be objective, get a trusted second (or third) opinion, and know it inside-out. These five bases should keep you covered in terms of structure, but we’ll unpick them a bit to help you flesh things out.
How to write a business plan – five key things
- Who and what
- The planning
- The money
These are the five things almost any investor will care most about, when reading a business plan. What the big idea is, where the market’s at, who you are and what you’ll be selling, how you plan to do it and finally, who’s showing who the money.
Your overview might actually benefit from being written last, once you’ve nailed out the detail and practicalities, but here are the two key things you need to include:
A straight-to-the-point summary, running through the key points included in each section of your business plan. Most people like the executive summary to be presented with the business plan, but as a separate document. People should be able to read it and understand the basics of your plans and projections, without actually reading the rest of the business plan itself.
This should be a clear description of your business, how it works (or how it will work), and key details. You should include what type of business it is, how it was formed and its history to date, its legal structure, locations (head office and operations) and how it works – is it online, mail order, shop floor or a combination of these?
Ready to go? Remember, ask yourself those key questions around clarity, realism and attraction. Is your executive summary clear enough to be used as a stand-alone document? And is it leaping off the page? Are you being realistic and factual about your basic company details? It may sound obvious, but never, ever lie in your business plan. It’s the worst possible start and can only end badly.
Anyone reading a business plan will be interested in the research you’ve done to justify your planning. Depending on your business type you may want to include particular studies, but the basic strands should include:
Paint the picture of your market, but nail it in fact with supporting data and external, established analysis. It can’t just be your empirical, personal view. Remember to explain who your target market is, and what the gap is in catering for their demand.
Who’s already doing what you’re planning to do? Are you looking to disrupt? Give a good overview of your direct and indirect competitors’ weaknesses, but also what they’re getting right. You’ll either be doing it better or looking to cut a niche, but again, it pays to be realistic.
Remember to factor in geography and type, covering your local customers and competitors as well as those in the online space. You never know from where competition may strike.
3. Who and what
This should be very straight-forward, mainly because investors and anyone reading the business plan won’t appreciate vagaries around who has a stake in the business. You’ll need to introduce:
The management team
Even if it’s just you, it’s important to say who’s involved. Who has a stake in the business, financial or managerial, and what are their profiles or backgrounds?
Products and services
You can either be exceptionally detailed here, with a complete briefing on every product or service you offer, or stick with the core list. Focus on where your strengths lie, and the opportunities.
Go back to those three key questions and be realistic. What do you offer on a daily basis? What’s publically available? What’s more of a ‘price on application’ product and what’s simply gathering dust on an old order form or website product page? Section it off and give priority to those core products you’re doing business with (or aim to be), with the rest neatly summarised.
This section is a great place to get the reader excited about what your business does and who’s behind it. Use every word to its advantage and let your pride and passion shine through.
4. The planning
Your plan needs to include some planning, after all. This does what it says on the tin. How do you plan to hit your objectives and achieve success?
Sales and marketing
This will cover your business metrics such as prices, how you’re taking things to market and how you’re going to handle transactions. Marketing will feed into this sales cycle, and your plan should outline a clear marketing and/or publicity or promotion strategy.
How does the business run and function? What are the premises? Who’s responsible for what? These are all things you need to include in your operations plan, and it should leave no stone unturned. Close any gaps and be clear about the areas that will benefit from development.
5. The money
Finally, the money. Show them it. You’ll need a crystal-clear summary of your business’ current financial position, the priorities for growth and where investment will take things to the next level.
Get a second pair of eyes at the very least here, and remember to include: your overall startup cost, or how much you need to keep going, how much you’ll need over the next two to five years, how you’re planning to use the money, possible reasons for extra borrowing (again, it pays to be realistic) and ongoing expenses, from salaries to insurance premiums.
These will be statements projecting the business income, plus balance sheets, for this year and next. I’d do the same for the third year too, to be thorough, but noting obvious caveats.
You have a choice here, either to write up the finances yourself <https://uk.godaddy.com/blog/smallbusiness-uk/manage-uk/6-financial-tips-millennial-business-owners/> or to delegate this to someone with a solid financial background. Part of setting up a business and entrepreneurship is gaining new skills and learning from innocent mistakes, but holes in the finances will really stand out, so get help where you need to.
The hard part’s done and your business plan is written.
Before you skip off to the bank, remember to spend an evening reading through it, asking yourself some challenging questions and getting to know it inside-out. My top tip is to get someone with bags of experience to give it an impartial review, and do a mini interview. Whether they’ve set up a business, invested in or advised other entrepreneurs, they’ll give you the best sense of how your business plan is going to stand up to scrutiny, and what will give yours a crucial edge.