Writing a business plan
Why create a Business Plan?
- It will help you focus your ideas and clarify the purpose of your business
- It will help you decide if your idea is commercially viable
- Can help identify potential problems
- It can help to identify business strategies including marketing
- Sets growth targets for your business including financial, marketing and sales
- Can be used to attract funding for your business
What should it include?
Business plans vary in terms of content depending on the type of business being undertaken. However, all business plans should include the following sections:
Executive summary – This should be no more than two pages long and will be an introduction to the rest of the document. It will be the first thing that any potential investor will read, so it needs to be written with care and needs to encourage them that you are a worthwhile investment and that they should read on.
Aims and objectives – What do you want from your business? Will it be your main source of income? Is your business an investment opportunity? Therefore when do you aim to sell it? Where do you want your business to be in five, ten years time?
Legal statement – Will you be operating as a sole trader, a limited company, a limited liability partnership or as a social enterprise? These decisions will affect your taxability and therefore your cash flow. You need to ensure you have carefully thought about your legal status and how it will affect your business in the future.
Do you require any licences to operate in your area of business?
Business description – What is the core purpose of your business? How will your products or services compare with those of your competitors? Who will be your customers?
Who will manage your business? Product/service management, financial management, marketing, administration including bookkeeping, staffing.
Marketing strategy – Who are your target customers? What is your USP (Unique Selling Point)? What is your long term marketing strategy? Sales targets, The 4 Ps: Product, Price, Promotion and Place.
Financial information and forecasts
Your business plan should include information about your current financial situation and how much money you will need to start and progress your business. This section should include the following information:
- a detailed plan indicating your initial start up outlay and what it is to be spent on.
- a break even analysis – to demonstrate how much of your product/service you will need to sell at a given price to cover all of your outlay and begin to make a profit
- a cash flow forecast – to show how much money you may have at your disposal in the coming months
- a profit and loss forecast – this will enable you to predict when your business will begin to make a profit
- a balance sheet forecast – this will provide you with a picture of the trading position of your company, what it will owe, what it owns and what it’s financial position could be in the future.
Operational plan – what do you need to do to turn your plans into reality? Things to be taken into account are:
- Staffing and training
PEST analysis (Political, Economic, Social, Technological)
SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)
Appendices for CVs, qualifications, legal documents e.g. property lease agreement, market/competitor research.
Writing the plan
Business plan templates are widely available on the internet or it is possible to purchase a variety of software packages to assist in compiling a plan.
Have a look at these websites for further information:
Gov.UK - the Government websites pages on creating a business plan.
Bplans.co.uk - free sample business plans for a range of different businesses.
Ensure that you present your business plan in a professional manner, with easy to read sections with clear headings. Get someone to proof read it for you, checking for spelling and grammatical errors.
Talk to a Business Advisor about your plan. Telephone the Library of Birmingham on 0121 242 4242 for further information.