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 hefty document and definitely shouldn’t be long-winded, especially if you’re trying to persuade your bank to fund your enterprise, attract new investors, or motivate staff.
So, what are the core elements of a business plan, thinking in particular about start-ups or small businesses, and what format should it take?
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 is.
- Define your goals in concrete terms. What do you want the business to achieve?
- Define your audience and the market. Show you understand who your clients or customers are and how they will access your product 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 full-blown SWOT analysis, but 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 to identify and articulate your objectives more clearly and identify what the challenges are and how you may 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 uses 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 buzz words.
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.
Downloadable Business Plan Templates
Also, as an alternative, find out about the one-page business plan, known as the Business Model Canvas.