How to write a business plan: part 1
Writing a business plan is an all important step to take in the early stages of starting a business.
The thought of writing up a business plan can seem daunting – especially if you’re only just venturing into the world of business and have little to no idea what to include. But it’s actually a straightforward process once you know what you’re doing, and you don’t even have to be fluent in business buzzwords and jargon to do it.
The opening part of your business plan should outline every detail of your business – things like what your product or service is, how it fits in with the market, your team, track record to date and your financial projections. You should also write about any funding that you’ll need to kick things off and sustain your business, and the expected returns from this.
The executive summary should tell someone who doesn’t know anything about your business everything they need to fully understand it. It’s one of the most important sections of your business plan, and investors and bank managers often make a decision about whether or not to back a start-up based on the executive summary alone – so make sure you get it spot on (no pressure).
Your business explained
The next part of your business plan should explain the background behind your business idea. This includes details of any work you’ve done so far, any relevant experience you have in your chosen field, and the proposed structure of your business. You should also explain what your product or service is and how it’s different from others that are already on the market, and describe what customers will gain from it.
This section is where you talk about who you’re planning to target with your product or service. Is there a particular age group or demographic that you’re aiming to reach? If so, give an indication of the size of this segment of the market and whether it’s growing or declining – this has major implications on the longevity of your enterprise. You should also outline any key characteristics of buyers in your target market, and give details of any customers you already have lined up.
Use the part of your business plan to also give information about your competitors in the market, and list any advantages or disadvantages that your product or service has over them. You want to convince investors to back you, so explain what it is about your offering that will draw customers away from existing products.
Your sales and marketing plans
Another crucial section of your business plan. Here, you’ll talk about how your product or service will meet customers’ specific needs and how you’ll position it in terms of price, quality and customer service. You’ll also detail the ways that you intend to market your product or service – will you sell over the phone, through a website, in person? How long will each sale take to complete? And will you be able to make repeat sales?
Explain how you will promote your product, whether it’s online, with advertising, direct mail or email – anything. Once you’ve outlined your marketing plan, identify where you expect to make a profit, and where there might be opportunities to increase margins or sales.
When you hand your business plan over to potential investors, you want it to convince them that your business is worth buying in to. In this section, you need to tell anyone who reads your business plan why they should trust in your management. Provide details by naming each management role and who will fill it, and describe their backgrounds and experience relevant to the position. Outline your management procedures for things like accounts, sales, and stock control, and how you expect to deal with key areas within the business.
To find out what else your business plan should include, read part two of our guide on how to write a business plan.