“I’ve got a great business idea but I just don’t know where to start!”
A phrase you’ve probably heard all too often – or maybe this is you. You’ve got an idea for a business, a passport to becoming self-employed, but you need a helping hand.
Well, any business needs a plan. It could be the difference between success and failure, direction and no direction, access to commercial finance to get the business up and running or a short shrift from the bank manager.
A good business plan is a priceless document. It sets out every reason for the existence of the business: how you plan to make money; where you plan to make it and with who as your customers; how much it will cost to get you there and how you will fund it. All of these things will help to focus your mind on what you hope to achieve with your business objectives – as well as what you will do if things don’t go to plan.
So, how do you do it? All business plans contain several essential, common sections.
Here is a basic structure you could aim for when writing your own business plan.
- Executive Summary
- Aims and objectives
- Marketing and sales
- Financial forecasts
Provide a clear index and quick reference to key sections of your business plan. This will make it easier to read – making it easier for you to sell your business idea.
Arguably the most important element of any business plan. The executive summary is your chance to summarise everything that’s great about your business – what it is, why it will work and how it will be executed. It should be clear, concise and ideally just one page of A4 (certainly no longer than two). A business plan is a document which will help you to secure funding and you need to capture your potential investor’s interest straight away. You can do this with the executive summary. Make your business exciting and it will make them want to read on. On a practical level, your executive summary should be written last. Pick out a few key points from each of the detailed sections of your final plan and use them to construct the executive summary.
Aims and objectives
Think about why you wanted to start the business. Where did the idea for your business come from? What is your own background within the trade or industry? Do you intend to employ any people? Where do you see the business in five or ten years time?
You could set out a series of objectives, following the SMART guidance. Make them specific, measurable, attainable, relative and time sensitive.
The aims and objectives section could be the place where you also identify your competitors. Complete a SWOT analysis – strengths, weaknesses, opportunities and threats – to clearly define where your product sits in the market.
Marketing and sales
This is the ‘how’ section of your business plan. Every successful business needs a good marketing strategy in order to identify its target customers, why they will buy your product or service and how they will find out about it. Your marketing plan can be broken down into the ‘7 Ps’.
Product – whether it is something tangible (eg a car or electrical gadget) or a service (eg car insurance, a restaurant), what is your product, what gap in the market does it fill and why will people pay money for it.
Price – will your product be a premium, budget or mid-range product? Your price is linked to where you see the product in the marketplace.
Place – where will you sell your product (eg online/offline) and how will you distribute it to your potential customers.
Promotion – how will you make your product attractive to people. Will you focus more on one marketing tactic such as direct marketing or PR, or a combination of tactics
People – who will sell your product? What impression will they create? People will be key to the success of your business.
Process – how will people get your product? Will they just be able to order it online, or can they make a phone call or get the product in person.
Physical evidence – particularly appropriate for service industries where there may be no tangible product. If your product is something intangible (eg an education course, financial advice) what will you provide to make it attractive. This could be something like a brochure, even down to the appearance of the building where you’ll provide your product or service.
The day to day of your business. An operations section of a business plan could include, but isn’t limited to, things such as administration, general management, recruitment, monitoring performance.
Outline in more detail how you plan to make money in the financial forecast section. Include a detailed breakdown of what your product will cost to make, how much you will sell it for and what it will cost you in manpower to make it, if relevant. Don’t forget to include how you are going to finance it – eg will it be through loans, government grants or life savings, for example.
The financial forecast section should also include a sales forecast, cashflow forecast and projected profit and loss for the first few years.
Identify how you will cope with financing the business if things go wrong.