A business plan is a vital document for outlining how your business will operate and it is an essential tool to attract support, backing and finance for your business. The business plan will outline the objectives, strategy, capability, viability and financial situation of your business idea. As well as being critical to attract support for your business, from banks, investors and customers, the business plan will also help you focus on what you want to achieve from the business and let you know whether you are on track.
A business plan will normally be made up of the following components:
- An Executive Summary – Although you would normally write it last, the Executive Summary is the first page of your business plan and briefly summarises all the other sections in the plan. Many investors will just look at the Executive Summary and only refer to other sections of the document if they need more detail.
- Your business, product and service – This section should be a brief and simple overview of your product or service, what you have done with the business idea so far, what experience you have, who owns the business and why people will buy from you rather than your competitors.
- Your market and competitors – The market and competitors section covers the market you will be selling to and your competitors. How big is the market? Is the market growing or declining? Are there any trends or industry changes looming? What are the advantages and disadvantages of all your competitors products and why will customers leave their established suppliers to buy from you?
- Sales and marketing – This section focuses on how you will sell and position your product. Will you position your product on price, quality or customer service? Who will your first customers be? Will you sell to customers over the phone, via a website or in a shop front? Will you promote your product online, in the press, via leaflets, via email? How will you price your products? How much profit will each of your products and services make?
- Management Team – In the Management Team section of the document, you need to demonstrate that you and any other people involved in running the business are capable of doing so. This involves outlining the skills, experience and qualifications of staff involved with the business. You need to convince potential supporters or customers of the business that your team has the capability to successfully manage the finances, staff, customers and suppliers that come with running a business.
- Operations – The operations section needs to contain all the information about your operational capacity. Where will you be located? Do you need any special equipment? How many employees will you have? Do you have a supply chain in place? Have you got procedures in place to manage stock and quality? Are you making good use of reliable ICT systems?
- Financial forecasts - This section focuses on the all important numbers for your business! Most small businesses need to provide at least a sales forecast (which buyers will buy which products), a cashflow forecast (how much money will flow in and out of the business bank account) and a profit and loss forecast (shows your trading position and how much profit the business can expect to make).
Your business plan may be used to sell your business idea to potential supporters, investors and customers so make sure it’s concise, legible and well presented. You can find many examples of business plans at the Bplans website.