A business plan is an important piece of information, so you should take care to make sure your create one that will form a solid foundation for you to build your business upon. Simply put, it is a written document that accurately describes your business, outlines your business objectives, what strategies you plan to use for operation and marketing, and projections for your sales and financial forecasts.
How will a business plan help me?
You may have the perfect business idea in your mind, but actually writing out your business plan will help you to clarify your business ideas and help you to think about them in fine detail. Laying out your business plan can often show up potential weak spots or problems that you may not have considered, but will also allow you to set about solving them before they ever become an issue.
Everyone that sets up a business will have goals to achieve. Your business plan will enable you to set your business goals, whether they be short-term ones that can be easily reached within a few short weeks or months, or longer-term goals for where you see your business in five or ten years time.
You can also use your business plan as your guide as you grow your business and measure your actual progress against your set goals and milestones within your plan.
Many businesses will look to secure financing from banks to help them start up or expand their business. You will need a sound business plan in place if you want to gain a business loan from a bank or seek investment from other financial bodies.
Having a well thought out business plan can also help to establish your reputation as a serious business. It can help to build trust in customers and clients, convince suppliers that you are genuine, and also help potential new employees to believe in you and feel secure in their employment.
How much time does a business plan cover?
Your business plan will set out your strategy and plan of action. Most typical business plans initially cover the first one to three years, but sometimes this can be longer depending on the rate of growth you want to achieve.
Putting your plan into writing will help you focus on each goal or idea and prioritise the most important ones to achieve first. Once you have sorted out your priorities and shelved any objectives that can be brought in at a later time, you can end up saving yourself a lot of precious time.
What you originally thought may take three years to implement may actually take less than two to achieve once you have sorted out your most important objectives. Your business plan will act as your benchmark for your business performance. It can help to keep you on track to achieve your goals and prevent you wasting time on other actions that may not be as crucial right at that time.
Tailoring your business plan to suit others
As well as setting out your own business goals and objectives, your business plan may be needed to sell the idea of your business to others, such as investors, shareholders and bank managers. In this case you should base your plan on detailed financial information where possible. Investors may not be too interested in the minutiae of your operational and marketing strategies, so you can tailor your plan to suit their interests and needs.
When applying for financial backing, try to keep the plan short. Use our checklist to make your business plan more appealing to investors:
- Keep the plan short
Focus on what the investor needs to know
Cut out any waffle or details that are not of their concern
Check your spelling and grammar
Overly detailed business plans are often quickly shelved
You might want to include:
- CVs of key personnel
Detailed financial forecasts, projections and assumptions
Market research data
Product literature or technical specifications
Presentation is key
When presenting your business plan to others, the overall presentation is very important. Make sure it looks professional or else you may not be taken seriously. Put a cover on your plan and include an easy to read contents page at the front complete with page and section numbering.
It would also be wise to start your business plan off with an executive summary as a nice introduction and overview for the reader. People will often make assumptions and judgements based on the summary you provide. This will basically summarise the key points of your plan to make it easier for your readers to understand. You should treat your business plan as an important and professional document, even when it is only ever going to be for internal use only.
Put yourself in your readers shoes. Look at your business plan from your target reader’s point of view. Does it make sense to you? Would it convince you to invest into it if you were approached for financing with this plan? Review and amend your plan until you are completely happy with it.
How to write your business plan
Going into detail about how to write your business plan and what to include in it would take up a lot of your reading time here, so instead we would like to recommend that you take a look at the Princes Trust website where you will find plenty of free tips on how to write your perfect business plan as well as free business plan templates that you can download and use in Word or PDF format. You will also find free downloadable business tables in Excel that you can use for your financial projections.