A good business plan is a concise yet comprehensive document that describes your business and its market, while detailing your objectives and explaining your strategy for achieving them.
Failing to plan doesn’t necessarily mean planning to fail, and having a business plan won’t guarantee success. But if you don’t have a plan – your business might never grow or achieve its full potential. Your goals can be ambitious or modest, but knowing what you want to achieve better enables you to plan for the future – otherwise you risk drifting without clear direction.
A business plan normally covers a period of up to three years and 10-20 pages is usually long enough for smaller firms. Producing a start-up business plan can help to crystallise your thinking and prove the viability of your business idea (on paper at least).
You should consider your business plan to be a living document, not something you produce when starting up, only to never update or look at it again. A business plan is essential if you need to attract funding or raise finance, of course, but the benefits don’t end there.
Writing a business plan can give you a much better understanding of your market and business, its strengths, weaknesses, opportunities and threats. Your plan can also provide a useful benchmark for judging your performance and growth, while reminding you of your business goals when faced with important decisions. You should update your business plan once a year, at least.
Your business plan’s financial information is key. Experienced people will test your numbers first, and if they don’t add up, your business plan won’t have any credibility. If you’re new to business planning, we can help you. But for now, let’s look at what information should feature in your business plan.
What content should feature in your business plan?
This allows readers to see headline points quickly. Although it appears at the front of your plan, it’s written last, when all facts are known. It must engage readers and inspire their confidence – otherwise they won’t read on.
Goals and Objectives
You must show where you want to take your business in the next one, two or three years, and that you’ve carefully considered how your goals can be reached. Your goals should be SMART (i.e. specific, measurable, achievable, relevant and time-bound).
Readers expect to find out much more about your business, including when it was set up, how and why, it products, services, core customers and ma
This can be less important for some businesses, but others need to detail their location(s), premises, facilities, staff, suppliers, etc, to shed light on how they make or sell their products or services and have the capacity to sell more.
Organisation and management
Readers (especially potential investors and funders) want to know who owns and runs the business and what skills and experience they bring to the role. Businesses must be in capable hands if they are to prosper and grow.
Working out your business’s strengths can help you to identify opportunities, while knowing your weaknesses can help you guard against threats. Being honest, particularly about your weaknesses, shows awareness and pragmatism.
What is your business opportunity? Are there enough sales to fuel growth? What is your market worth, what competition do you face and what sector trends are evident? Your business plan should answer all such key questions.
Marketing and sales strategies
Your plan should explain how you market and sell your products/ services. Business plans often include a condensed marketing plan that explains this, while describing your target customers, demand, pricing strategy, etc.
The numbers are often a business plan’s most important component. As well as previous sales, costs, cashflow and profit and loss figures, your business plan must include forecasts for the next 12 months or more. Experienced readers expect reassurance that there’s enough cash to keep your business afloat.
You might need investment or finance to achieve your business plan goals.
That’s fine, but you must explain exactly how much you require, how it will be spent and what returns it will generate.
Do your research before writing your business plan
Now you know what information you need to include, you can start to gather it. You might need to update your market knowledge, perhaps by finding out specific facts and figures. Or get together more current information about your business, its products, services and people.
Leave yourself enough time to find out key financial data and make calculations (possibly with help from an accountant if you lack knowledge, experience or time). Be thorough in your research, so that you have all the information you need to write a sound business plan. Make sure it’s as current as possible and that all key questions are answered.