A good business plan is the backbone of a growing business. It doesn’t need to be hundreds of pages long, but it does need to explain clearly and accurately what your business does, where it wants to be in the future, and how it'll get there.
Below are some key areas you need to cover and think about when you're writing the business plan:
1. Profit and loss
Realistic cash flow and profit and loss forecasts are crucial, along with explanations of how you worked them out. Some can include detailed market and competitor analyses. In essence, your business plan should contain everything required for a bank business loan application.
2. Business idea
Your business plan needs to include a detailed description of your business idea, including your objectives, strategies and expectations. When you describe your product or service in the business plan, explain how you'll make it stand out from the competition and meet the needs of customers.
3. Identify challenges
Your plan should also identify any potential difficulties you might face, explain how you’ll avoid or resolve them, and set out how you’ll measure your progress towards your goals.
4. Marketing strategy
Describe your market research, including information about your rivals and how you intend to compete with them. Explain your marketing techniques and how you’ll secure sales. Outline the structure, staffing and management of your business, and include realistic forecasts of your sales and expenditure.
5. Planning for startups
If you’re just starting out, your business plan should cover the time you think it'll take for:
- Your business model to get established
- Your startup costs to be paid
- Your position to become stable
Your timescale will vary depending on your industry and your specific circumstances, but two years is a good starting point.
Once you’ve started trading, you should aim to update your business plan at least every six months in the early years, and whenever there are any major changes to your business model. Each time, extend your timescale to account your plans for expansion and growth.
To summarize the five steps to writing your first business plan, take a look at the interactive below: