Business Plan Preparation Guide
The importance of a business plan sometimes gets devalued. However, it's your business backbone; an analysis of your offering, the challenges it faces and the steps needed to achieve long-term success.
Some people write plans as a reference point and others for a specific audience.
An example would be writing for a pitch with your bank in the hope of securing a loan.
Whatever your situation is, by taking the time to consider your business plan requirements before you write it ensures you develop it with a clear focus on the result.
What do You Need to Get Started?
It's a good idea to use a template to check the essential elements that constitute this critical document. By adhering to a template, you can ensure that your information is collated and presented in an easy to follow and systematic manner.
You'll find a number of worked examples on our Tools and Templates page. If you're writing for a bank, you'll need to follow the required sections religiously and ensure that no key information is left out.
If you're unsure of an answer or the details need for a particular section, then don't worry. It sometimes takes time and research to fill out certain sections.
It sometimes helps to jot down notes initially and return with a fresh mind a few days later. Never be afraid to ask for help! If you can find someone to critique your research and ideas, you may gain new perspectives that you hadn't previously considered.
8 Key Elements to Consider
Below, you'll find a list of the key elements you'll need to consider before writing an effective business plan. It's important to note that mere answers to these elements are not sufficient.
You'll need to back up your points with as much evidence and research as possible (especially if you want to secure funding). Try and look at your writing objectively as you scribble down notes. Picture how people could challenge your points and try and prepare for every eventuality.
Your detailed market research not only helps you develop a considered business plan, but it will also help you gauge whether your offering is realistic.
1: Selling Yourself and Your Business
As the driving force behind your business, you should ask yourself the question "why would someone invest in me?" After all, your business offering is only half the battle. Your passion, integrity and professionalism are what sets you apart in business, so think about how you can communicate your profile in the biography appendices.
2: Your Staff and Colleagues
What are your colleagues bringing to the business? Make sure you write down their experience and specialisms, and how they'll make a difference long-term.
3: Your Customers and Marketplace Statistics
Who are your target customers? Are you targeting a certain demographic? If you are; why this particular group of people?
4: Your Products and Services
What are you bringing to the table? Is there a demand for what you're offering? Make sure you detail the quality of your products or services, construction methods, raw materials used and your supply chain, if applicable. If you can provide market research data that demonstrates the demand for your offer, be sure to include this as it increases your credibility.
5: The Benefits You Offer
Analysing your competition is a key aspect of developing a successful business, so do your homework and be realistic. Answer these following questions in your plan:
- What sets your business apart?
- Who are your competitors and why are you different?
- Is there room for you in the market?
- How will your competitors react to your products?
- How will you remain competitive?
6: Prices and Margins
How much will you charge for your products or services? What are your overheads? What prices and margins are sustainable for covering costs and producing a profit?
Where is your business going to be based? Why have you chosen this location? Are you aiming to expand to other locations?
8: Funding and Finance
What financial resources are required to launch and operate your business for the first 12 months? Can you secure the necessary funding? Will this be drawn from personal savings or another source?
Additional Elements you May Want to Consider
Aside from the previous examples, you should consider additional questions and opportunities at this early stage to save time in the long-run. Some examples include:
How loyal are customers in your target market to your competitors?
Do you plan to recruit more staff as your business develops? How will you acquire these people?
How will you manage cash flow once the business has started?
Credit Terms and Payments
Can you negotiate longer credit terms with suppliers?
Have you researched laws and policies that your business must adhere to in the industry it's operating? What about local tax and government legislation?
Your executive summary encapsulates your business, presenting it in a concise and appealing manner. Although placed at the start of most business plans, it's actually the last page you should write. Why? Think about it: It's much easier to summarise something once you have clear details and research to work from.
The First Steps
Now you're aware of why you should write a plan here's a guide to start and prepare this vital document. The best advice we can share is just to start writing something.
Have all the main headings on different sheets of paper or a word document and begin to complete them.
If you don't have all the answers to hand don't worry. Add more when you have them.
Some of the key questions you'll need to answer in your plan are as follows:
- What's the demographic profile of my customer?
- What problem is my product or service satisfying?
- Why are my products better than my competitors?
- Is the market increasing in size over time or decreasing?
- Are my prices more or less expensive than the average?
The financial part of any venture can be the hardest to construct but you don't need to prepare hundreds of pages of data. Just preparing a month by month projection for the first year and then quarterly, or even yearly, for years two and three is sufficient. Prepare a Profit and Loss account for sales and costs, a simple Balance Sheet and a cash flow. For your P&L include the following:
- Sales by product calculating total units sold, multiplied by the unit selling price, then deducting the unit cost price.
- Any other direct costs of sales.
- All fixed and variable costs such as rent, rates, utilities, accounting and marketing.
If you struggle with forecasting financial data, then have a specialist assist you or use the financial planning spreadsheets included with each of our planning products.
Software and Resources
Feeling inspired? Then download one of our investor-ready sample business plans now! With numerous industry-specific templates, ranging from bars to recruitment agencies, you're sure to find a template relevant to your business. Take the stress out of developing a business plan and download one of our ready-made plans now!
Other Planning Tips
Your Competition - Understand your competitors and learn from their success. Analyse why they're performing well and replicate or improve on their achievements.
Rating their relative strengths in your market can critically improve how you target and promote to your customer base. New competitors are important for sleeping industries as they help improve the entire market.
Marketing Plans help you understand your main target customers, their needs, and how to promote your products.
Ensuring that your customers drive your innovation, product development and other strategies should make you into a true market leader.