What is a business plan and why do you need one?

business plan

Why write a business plan?

A business plan is a written description of your business and your business goals. There is no law that says you have to write a business plan or indeed write it in a certain way, however if you are looking to secure funding or finance then you will be expected to have one. Furthermore, it’s best practice to write a business plan when starting a business as it helps you visualise how your business is going to be a success and also points out possible flaws that will need addressing.

In short your business plan will demonstrate:

  • The vision for your business

  • Who’s going to help you realise it ?

  • Who are you going after (competitors)

  • What are they doing that works and that you can do better?

  • How are you going to shout about it!!!???

A business plan would conventionally include the following sections:

  • Executive Summary
  • The Business (what does it do / offer)
  • Management & Personnel
  • The Market
  • Market research and analysis
  • Business and marketing strategy
  • Operational details
  • Figures and financial overview
  • Risk analysis
  • Appendix

Considerations when writing the above would be:

Executive Summary

  • Business summary
  • Business aims and the vision for your business
  • Financial summary (often stated separately in terms of a cash flow forecast & Profit and Loss)
  • Your business name

Owner’s Background

  • Why do you want to run your own business?
  • Previous work experience
  • Education and qualifications
  • Training completed or any future training you would like to undertake

Products and Services

  • What are you going to sell?
  • What will be your chosen routes to market (e.g.on-line/in-store/concession based/franchise / omni-channel?)
  • Description of the basic product / service
  • Will you sell all your products and services straight away?

Your Market

  • Who will your customers be / what is your customer profile?
  • Where are they located? How do they currently shop for the products you sell?
  • Can you qualify the demand that exists for your products or services?

Market Research

  • Key findings from desk research/ market data reports (e.g. Mintel, Euro Monitor etc)
  • Key findings from field research / or test trading period?

Marketing Strategy

  • What marketing methods are you going to use?
  • How much will each method cost?
  • Why have you chosen these methods?

Your S.W.O.T Analysis

  • Strengths
  • Weaknesses
  • Opportunities
  • Threats

Competitor analysis

  • What competitors do you already have (name, location and size)?
  • What strengths and weaknesses do your competitors have?
  • What products / services do they sell?

Operations and logistics

  • Details of production
  • Delivery to customers
  • Payment methods and terms
  • Suppliers
  • Premises
  • Equipment
  • Transport
  • Legal requirements
  • Insurance requirements
  • Management and staff
  • Additional Information

Costs and pricing strategy

  • Name or each product /service with number of units, total product / service cost per unit, price per unit, profit margin and mark up

Financial Forecasts

  • Sales and costs forecast for the next 12 months (Cash flow forecast)
  • Personal survival budget listing out all your personal monthly costs

Back-up plan

  • Short-term plan
  • Long term plan
  • Back-up plan

Good luck with writing your plan and remember – match your plan to your purpose!

Authors

Sarah Kerrigan at Company Formation Made Simple

Company Formation Made Simple are part of the Made Simple Group who provide services designed to help businesses start, run and grow.

Pete Schonbeck, Business Adviser at London Small Business Centre

Need help with your plan?

London Small Business Centre runs monthly interactive workshops at The British Library, Euston to help you get your plan into shape. Click on the months below to read more and buy your ticket.

October             November           December

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