A business plan needs to explain clearly and concisely about your business and the industry you are entering along with financial forecasts and how the business is going to be managed.
A business plan provides you, the owner, information as to how viable your business is likely to be and how to address any potential issues. It will also illustrate to anyone you may be looking to provide funding for your funding that you have a full understanding of your business and marketplace and your financial forecasts are realistic and viable.
What Goes Into a Business Plan?
A business should include the following information:
· An introduction with a brief overall summary of
your business
· Details of the business owner/s with relevant
background information
· A full business description:
o
What your business offers, Who does it help? How
does it help them?
· Future business goals
· Information about the market you are entering
into including:
o
Market research, Industry trends, Competitor
analysis
· Your proposed marketing strategy to reach your
desired audience
· A SWOT analysis
· Financial information including:
o
Start-up costs including how the business will
be funded
o
Operating costs and pricing
o
Sales forecast and Cash flow forecast
o
Personal survival budget
· Business operation
· Legal requirements
It is helpful to use a template to complete your business plan. There are many available online but if you are sourcing funding from a specific lender, it is wise to ask if they have their own specific template they would prefer you to complete.
Writing your Business Plan
Executive Summary (introduction)
This is an overview of your business idea highlighting the most important aspects along you’re your key objectives and goals. This needs to be clear, concise and to enable the reader to quickly understand what your business is about.
Background Information
This section needs to explain who the business owner is along with any relevant background information such as transferrable skills from other work or hobbies, training, qualifications and experience. Explain why you want to start your own business and why you believe you will be successful.
Business Description
Here you need to explain the background to the business idea and describe your specific products or services.
Describe your ideal client and what benefit there is to them from buying your product or service. Outline where the business will be based, any specific opening hours and why you believe customers will buy from you rather than your competitors.
Business Goals
This section needs to set out the short- and long-term objectives of the business. Where do you hope to be with the business in one year, five years and 10 years? Do you plan to expand the business in the future or take on any employees? Are you planning on introducing new products or services as the business grows?
The Market
This is where you will explain what market research you have undertaken to determine there is a need or want for your products or services, the characteristics of your ideal client and how you will fulfil their needs.
From any research you have undertaken, explain current industry trends along with any future predictions. Back this up with any data you have either from personal research such as surveys or from industry information available from resources such as the Office for National Statistics or factsheets via the British Libraries.
Include competitor analysis to show you understand who else can provide what you are offering, from where and at what price. List their strengths and weaknesses and explain how you plan to stand out from them to take a share of the market.
Marketing Strategy
Explain what marketing channels you will be using, why you have chosen them, and the costs involved. Will marketing be done offline, online or a mix of both. Your market research should provide insights into what marketing channels your ideal clients prefer and use so include this information.
SWOT Analysis
SWOT stands for strengths, weaknesses, opportunities and
threats.
Strengths and weaknesses are internal to your business:
· Strengths – what are they and how will you make
the most of them
o reputation,
location, superior product
· Weaknesses – what are they and how will you
overcome them
o Poor
time management, lack of technical skills
Opportunities and threats are
external to your business:
· Opportunities – what are they and how will you
make the most of them
o Competitor
closing, new transport links
· Threats – what are they and how will you
overcome them
o Rising
supplier costs, losing key staff
Financial information
Start-Up Costs
List down all the costs that will need to start the business. Include all costs such as rental of premises, purchase of equipment, stock supplies etc. When you list any equipment make a note of whether this will be purchased or rented and whether new or second hand.
Funding
How are you going to fund getting the business off the ground and to keep it afloat for the first few months? List any sources of income you are putting into the business such as personal savings, crowdfunding campaign, loans or grants.
Costs & Pricing
Here you need to show what it costs to produce your product or service and what you are going to charge for it. This will illustrate what gross profit margins your products or services will bring to the business.
Sales Forecasts
Here you need to forecast as best as you can what sales you expect to make. These figures are going to take a certain amount of guesswork, but they do need to be realistic and not overly optimistic. Don’t forget to factor in seasonal trends and allow for any time off you may take if you are providing a one-to-one service or doing everything yourself.
Personal Survival Budget
You also need to include a personal survival budget showing how much household income you have coming in each month, what expenditure you have going out and how much you need to draw from the business to survive financially.
Cashflow Forecast
Now you have forecast your sales you need to create a cashflow forecast showing when you expect to receive payment into your bank account along with costs going out each month. You may make a sale in month one but not receive the income until month 3 if the customer has a credit agreement with you. Or you may take 50% payment up front with the remainder payable upon completion of the sale for any bespoke work.
Direct and indirect costs need to be included in the cashflow forecast.
Direct costs relate to costs involved in making sales. This could include packaging, materials etc.
Indirect costs are those that need to be made regardless of how many sales you make such as insurance, rent, heating and lighting etc.
Once figures are entered the cashflow forecast will show your gross profit (sales less direct costs) and net profit (gross profit less indirect costs). Remember to include any start-up funding you may be introducing into the business and hopefully there will be a positive figure indicating a profit.
Business Operations
This section explains how your business is going to be run,
where from and who is going to do what. Detail what tasks need completing, who
is going to complete them, where from and how. Include details of supply
chains, inventory control, auditing, financial control, admin duties etc.
Legal Requirements
Here you need to detail all legal requirements to run your business and to show you will have these covered.
List any insurances you need and where you will obtain these from, any licences required, and if you are applying for any patents, trademarks etc.
Top Tips for Writing a Business Plan
Keep figures realistic. Don’t be over-optimistic with sales and underestimate costs.
Cross-reference what you have written with your financials. If you have listed various marketing activities or purchase of equipment, the costs of these need to be shown in your cash flow forecast.
Cut the waffle. A clear, concise business plan is likely to fair far better if you apply for funding than one full of unnecessary information which the reader has to wade through.
Author Bio
This article was written by Angie Taffs, Business Consultant.
Angie is a SFEDI qualified business advisor who works to support the start-up and growth of small businesses. She has over 30 years of experience in sales, marketing, customer service, and communication and has previously worked as Senior Business Advisor for the European-funded Superfast Business Program and the Government Start-Up Loans program. She now spends her time running her own business consultancy and running The Small Business Kit.