How to write a business plan for your limited company – includes downloads

A good business plan sets out what you want to achieve and how you intend to make it happen in clear and simple terms.

It doesn’t have to be a lengthy document and definitely shouldn’t be overly wordy, especially if you’re trying to persuade your bank to fund your limited company, attract new investors, or motivate staff.

So, what are the core elements of a business plan, particularly for start-ups or small businesses, and what format should it take?

What’s in this guide?

• What every business plan needs
• Benefits of writing a business plan
• Choose a format and style which suits
• How to use your business plan
• 10 business plan mistakes to avoid
• Downloadable business plan guides and templates

What every business plan needs

For a business plan to be credible – and not come across as mere wishful thinking – it has to contain some essential information about your business. Most business plans should include the following:

• An overview of your business, stating what you do and what, if anything, makes you different. If you have a unique selling point, be sure to say what it is.
• Define your goals in concrete terms. What do you want the business to achieve?
• Define your audience and the market. Demonstrate that you understand who your clients or customers are and how they will access your products or services. State how the market operates and where you see your place in it, in terms of your products and pricing.
• Provide basic financial details about set-up costs, production and operating costs, and where investment is coming from. What is the break-even point for your business? Include both short and long-term goals.
• Who is on your team? People are key to the success of every business, so describe your team, briefly mentioning collective experience and skills and the passion you share for the business.

Depending on your type of business, you may also want to include a marketing plan, advertising strategy, or a full-blown SWOT analysis; however, remember to stick to the point and be brief.

Benefits of writing your business plan

Writing a business plan is not just for the benefit of would-be investors or your bank manager, but is a useful process in itself.

It will help you identify and articulate your objectives more clearly, as well as recognise the challenges and explore ways to overcome them.

By stating your short-term and long-term goals, you’ll have to consider how you will measure and demonstrate progress. Writing a business plan forces you to be proactive and can be a strong statement of intent that will help to keep you on track going forward.

Choose a format and style that suits

A business plan doesn’t have to be just a bunch of facts and figures or be presented in a traditionally linear format. If you’re a start-up involved in design or one of the creative industries, for example, let this shine through in your business plan by choosing a format that reflects your creativity.

By all means, use images, charts, and infographics as well as words, whatever helps to get your message across, so long as the information is easily understood.

Remember, your business plan has to be shareable by lots of different individuals, so keep it simple and use plain English, avoiding jargon or the latest buzzwords.

How to use your business plan

A business plan is not simply to clarify your ideas before launching or to help secure funding for your venture, but can play a key role in how you run and understand your business on a day-to-day basis.

You can use your business plan to compare actual results with the original forecasts you made, to see if you’re on track and whether you need to revise your goals in any way.

Were you right about how customers would access your products or services, or understand your brand, and do you have to develop new strategies? Check your business plan regularly to chart your progress.

The business plan can be amended or adapted in response to change, for example, if the market reacts to external influences, or the competition is doing something different.

Your business plan can also serve as a kind of manifesto that you choose to display prominently for staff to see.

There is no single right way to produce a great business plan but there are a few definite things to avoid at all costs.

Steer clear of the following ten common mistakes and you’ll increase your chances of convincing potential investors that you really do mean business.

10 business plan mistakes to avoid

1. It’s not all about you

Your personal attributes are important and may be key to driving the business forward but prospective investors are more interested in the specifics of the project. Instead of promoting your expertise, dreams or past successes, focus your business plan on delivering answers and addressing any areas of concern your potential backers may have.

2. State your objective

Don’t neglect to give individuals a reason to invest in your project or business. Be specific about what they can expect to get back in return and what your objective is for the business going forward. If you want to build up the business to sell it, then say so; if this is a one-off project or part of a long-term strategy, make that clear to investors.

3. Don’t inflate the numbers

Even if you believe your business will enjoy exponential growth, be sensible when it comes to throwing in numbers. Show you’re a strategic thinker by rounding up revenue forecasts and being realistic about what you believe can be achieved in one, two, or three years down the line.

4. Market research

Your project is not an aspiration but a well-thought-out plan based on solid market research. Data from a Google search won’t cut it, so show you’ve done your homework and understand how the market works, where the need for your products or service exists and the niche or gap you aim to fill.

You may have a great idea, but you have to convince investors there’s a real demand for it. For example, if you’ve tested it on the market, explain briefly how well your product was received.

5. Don’t forget your USP

Don’t forget to explain what makes your business special. If you have a unique selling point, clearly state what it is and how it differentiates you from your competitors. If what you have to offer is an improvement or iteration of what already exists, say how this will give you an advantage.

6. Don’t dismiss the competition

Even if you have an exceptional product, you’re likely to have some competition – if not now, then in future. Don’t try to pretend otherwise or dismiss the competition.

Backers will be more interested in seeing that you’ve considered how competitors may react, what this could mean for your business, and what your strategy will be in response.

7. What are the risks?

There are always risks in every venture. It’s essential to demonstrate to potential investors that you have considered various factors, including market demand, competition, resources, supply chains, and possible worst-case scenarios, and how you would address them.

Of course, the flip side of risk is reward, so don’t neglect to articulate the potential for growth by using simple graphics, where possible.

8. Don’t underestimate the resources you need

As a start-up, you may be operating from home and have fairly modest overheads, but as your business grows, you will need more resources.

Don’t neglect to factor in future costs to cover moving to bigger premises, buying new equipment, taking on staff, paying suppliers, consultant fees, and any other expenses you may incur to achieve the kind of growth you predict.

9. Serious investors aren’t naïve

Remember, serious investors will conduct due diligence before investing in your business, so ensure you are completely honest with them at all times. Don’t be tempted to exaggerate what the business can achieve or has already achieved to date.

By all means, be positive in your predictions, but never try to mislead investors.

10. Keep your business plan up-to-date

You may be lucky and get the backing you need at the first attempt, but getting your business off the ground could take some time.

It’s essential to stay informed about market developments and adjust or update your business plan as needed.

Presenting a plan that doesn’t reflect the current market or business environment will make you look out of touch and could scupper your chances of attracting investors.

Downloadable Business Plan Templates

You can access free business plan templates from a number of reputable sources:

• GOV.UK – Write a business plan: The official UK government guide with a simple downloadable template and advice for startups.
• Startup Loans Company: Offers a comprehensive business plan template tailored for new businesses seeking funding.
• The Prince’s Trust: Templates and resources aimed at young entrepreneurs.
• Barclays Business Plan Template: A detailed downloadable template with extra tips on financial forecasting.
• Enterprise Nation: Free template and useful startup resources for small business owners.
• Santander Breakthrough: Template and guide for growing businesses, especially useful for scale-ups.