How to write a business plan: Advice and templates (2024)
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Posted: Mon 12th Aug 2024
The purpose of a business plan is to explain what you want to achieve and how you're going to make it happen.
This guide will walk you through how to create your own business plan and includes a detailed business plan outline for you to follow, which you can find at the link below.
In the following webinar, marketer Sophie Eglin explains which key elements you should include in your business plan, and shares practical tips for developing a plan that works for your unique business needs.
What is a business plan?
A business plan provides a roadmap for the work you need to do, and gives you a chance to flesh out key areas before you start building your new business.
It also helps test your idea and gives you a clearer understanding of what needs to happen to make it a reality.
Why is a business plan important?
Completing the different sections of a business plan makes sure you've thought about all the different aspects of running a business.
It's a great motivational tool, too. When you've written down the steps you need to take, you know how to start moving forward and therefore hold yourself accountable.
Keep in mind that most finance lenders will want to see a business plan before they give you money. If you're writing a business plan for a particular organisation, make sure you've checked what they want you to include.
VIDEO: Perfecting your business plan
In this webinar, HSBC's Carrie Taylor-Mell and Stefan Johnson explore what makes a good business plan, what to include and avoid when you’re writing one, and what banks look for when assessing a business plan.
Business plans also provide accountability. They allow you to sense-check what you're doing and why. And they provide an opportunity to get ideas out of your head and start working on them.
Jonathan Bareham, co-founder of accountancy firm Raeden, says:
"Not having to report to anyone is attractive when you start up. As you grow, it can be tricky not to have a sounding board. A business plan can be useful for that."
He highlights the role of goal-setting in the planning process. Why are you starting a business?
Is it because you want a good work-life balance?
Do you want to make an environmental impact?
It's likely a combination of factors. Writing down your motivation provides a reference for big decisions and makes sure you don't lose focus.
Business plans help explain what you're doing to other people. The process of writing everything down makes sure you can answer key questions about what you're doing.
Hiring people, opening premises or buying equipment requires significant investment. Planning and justifying what you're going to spend is important. Sharing them externally helps reassure partners, whether you're looking to borrow money or win over a mentor.
What types of business plan are there?
The main type of business plan is a written document, which is what we cover in this guide. You can use a template or follow a business plan outline to know what to include (more on that in a moment).
It's important to pick the format that's right for you, so consider what you know so far and how you're going to use the plan.
If the plan is for your own benefit, you need to think about how much you can know at this point. There are lots of assumptions around sales and costs that you won't know until they're tested. This will limit the level of detail you can include.
The audience is important too. You could write a five-page summary if the business plan is just for you. If it's for raising investment or applying for a loan, it's going to require more detail and might be 15 to 20 pages long.
Organisations like the Prince's Trust and Start Up Loans, which offer start-up funding, have templates that they prefer or require applicants to fill out.
David Abrahamovitch, founder and CEO of London café-bar and restaurant company GRIND, says his founding team didn't create a business plan until they needed to borrow money. He believes a formal business plan doesn't provide much value at the concept stage.
"Business plans absolutely have their place but I see people who are spending months writing one. They're worried about who's going to copy their idea about trademarks.
"All of these things are important, but at the moment you don't have a business. You don't have a brand to protect. You're worried about the wrong things.
"You have to get to the minimum viable form of that business as quickly as possible and just test it."
In the video below, David talks more about his company's business planning process:
The Lean Canvas model
The length of traditional business plans can be intimidating. You may also lack the information to put one together if you haven't started trading yet.
The Lean Canvas model allows you to create a business plan on a single page (usually A3 size). Each section covers a topic that's important to building a business.
The structure examines whether a business idea is viable. The nine boxes capture some key assumptions, covering topics like the following:
Problem: What customer challenge does your product solve?
Solution: What does your business do?
Key metrics: How will you measure success?
Unique value proposition: What makes your business stand out?
Unfair advantage: What do you have that your competitors don't?
Channels: How will you market your product?
Customer segments: Who are you selling to?
Cost structure: What expenses will you have?
Revenue streams: How will you generate sales?
The Lean Canvas is designed to provide a snapshot of your idea and challenge the assumptions you've made. It's not meant to be perfect, and takes about 30 minutes to complete.
It's a great way to quickly test a business idea or potential new product. Do a Google Images search for 'Lean Canvas' to find examples.
Testing your assumptions through research
Launching and growing a small business is really exciting because you don't know what's going to happen. However, writing a business plan can be daunting as there are so many things you don't know yet.
Make phone calls and search the internet to strengthen your assumptions. It's possible to find information on standard services like accountants, renting desks or buying raw materials.
There are other aspects that are more difficult to predict. Projecting sales, for example, is one of the trickiest parts of forecasting. You love your product but will customers flock to the business?
Test trading
One opportunity to solve this problem is to do a small amount of test trading. Paying for a market stall may cost you a thousand pounds after you pay for the stock and a location.
But the investment may pay dividends if it gives you a reality check on what customers are willing to pay and how popular your offering is. What's the least you can spend to learn the most?
Research what competitors are offering too. What are people paying for related products?
If you're a service-based business, you might be able to trial your offering part-time. Perhaps you can take on a client while still working your day job.
Make sure you justify any forecasts in your business plan and provide a logical explanation of how you came to your conclusions.
What should I include in a business plan?
The aim of a business plan is to understand how you'll implement an idea. That means it's important to cover the different elements involved in starting and running a business.
The following sections explain what to include in each part of your business plan.
Start with an executive summary
What's your business idea? It's important to be able to explain your business in a succinct way. The executive summary should do exactly that.
Start with a summary of your business and the product or service it's going to sell.
Include short summaries of the other sections of your business plan – particularly how you're going to generate income and make a profit.
Identify the key people involved, emphasising their strengths (this can include advisers and partners).
Highlights from your progress and upcoming milestones.
A page or two should be enough to convey all the information that's needed.
If you struggle to explain your business to people you meet, or to write it down in an executive summary, invest more time in trying to break down the concept. Having a solid 'elevator pitch' helps with sales and marketing.
Lay out your vision and objectives
Why are you starting a business and what do you want to achieve? You're likely to have a mix of financial and non-financial goals – for example:
acquiring five clients in your first six months of trading
generating enough profit to go full-time on the business in year two
growing traffic on your e-commerce site to 5,000 monthly users
It can be helpful to split these into short (12 months), medium (one to two years) and long-term goals (three years and longer).
Make sure goals are S-M-A-R-T: Specific, measurable, achievable, realistic and timely.
Example of a business vision and objectives: A small tech business might have a vision to revolutionise the way people communicate by creating innovative and user-friendly communication tools.
Its objectives could include:
developing a messaging app that allows seamless integration across different devices and has very strong privacy and security features
continuously improving user experience through regular updates and customer feedback
The company's vision and objectives are in line with its core values of always being innovative, satisfying the customer, and taking advantage of advances in technology. It aims to become a market leader in the communication industry and provide solutions that simplify the way people connect with each other.
Analyse the opportunities
Your executive summary, vision and objectives have helped set the scene. But what kind of opportunity is there? This section includes your target customers and your competition.
Start by describing the types of people you'll be selling to. Useful information includes age, gender, income and location.
Try to be specific. Saying you'll target "other business owners", for example, doesn't help you understand how to market to them or how much they're likely to spend.
Instead, go into detail about the sector and size of businesses, the challenges they face and how you're going to help them.
Example: A social media agency might start this section by saying:
"We will primarily help restaurants in Manchester and the surrounding area with their social media marketing. The owners are responsible for marketing and use social media, but are time-poor and aren't getting enough value from these marketing channels."
Think about buying triggers, too. A café might target commuters walking to a local office complex first thing in the morning and be pushchair-friendly for new parents arriving mid-morning.
Creating customer personas is a useful way to better understand your target market if you're struggling with this section.
What's the size of the opportunity?
Understanding the potential of the business is important for financial planning and goal-setting – and getting motivated!
Once you know your target market, you can start to think about the size of the opportunity.
Estimating the size of the market and how much you can capture is difficult. Start by looking for statistics that relate to your target customers, such as the number of independent restaurants in Manchester, and any information on how much small restaurants spend on marketing.
Doing original market research is really useful. Draw up a questionnaire and start talking to potential customers. Most people want to help, particularly if you start by talking about the challenge you're solving.
Opportunity analysis: The key questions
The opportunity analysis section should answer these questions:
What evidence do you have that customers will buy from you?
Who are your competitors?
Do you know enough about the opportunity to build a marketing plan?
What changing economic or market factors will affect your business?
Assess the competition
Now you've thought about who within your market you're competing with, you need to evaluate them. Don't fall into the trap of thinking you don't have any competition!
Try to find three or four businesses offering similar services and write a short section detailing:
the company
its unique selling point and differentiation
its strengths and weaknesses
If you're offering something completely new, there's likely a reason it doesn't exist already, so understanding your customers' challenges is doubly important. And, you're still competing for your target audience's time and money.
Throughout this process, you should be thinking about this from your customers' point of view – why will they choose you over your competitors?
Segment your customer base
To drill down deeper into who exactly your business is targeting, divide your audience into segments. You should base these segments on certain criteria, such as:
age
gender
level of education
occupation
location
This is crucial, if, for example, your product or service is for a specific age group or people living in a particular location.
Describe your operations
It's important to understand what suppliers and partners you need to make your business a success. Your business plan should include details of what type of partners you need and any current relationships.
Include any equipment, the workspace you need and the costs involved, too. That will help you understand the costs to get up and running.
This operations section of your business plan should ideally provide details on the following (some may not apply to your type of business!):
The product or service you offer
Your production process or delivery process
Any tools, plant, machinery or equipment you use
Any technology (computers, software, devices and so on) you use
Your suppliers and main materials
Any relevant licences you hold, regulations you must comply with etc.
Your plans and pledges to reduce your environmental and carbon footprint
Describe your people
Anyone reading your business plan will want to know who the main players are within your business and who you have working for you. Write it all down in this section, and include the following:
Who manages the business, and their level of experience
Who makes up your team (if you're a solopreneur, give details of anyone to whom you outsource work)
Anyone else you seek outside help from (technical, professional, financial, legal and so on)
Who's responsible for selling your product or service, and their qualities and experience
How you network, both face-to-face and on social media
Your processes for onboarding staff and looking after their wellbeing
How your business serves the local community and wider society
Your pledges for transparency and good governance
Develop a sales and marketing plan
When you understand the opportunity, you can start thinking about how to sell your products.
You can't take an "if you build it, they will come" approach to starting a business. You need to clearly define how you're going to reach potential customers. That includes the time and money that you need to invest into different marketing channels.
Write down your key marketing channels and how you plan to use them. This should be heavily influenced by conversations with potential customers – where do they find information about products? – and will evolve over time.
Potential sales and marketing channels include:
social media
cold-calling
Detail is key in promotional campaigns
It's helpful to go into detail about two to five key marketing campaigns. Include the cost, timing and what you hope to achieve.
For example, you might have a launch event at a newly opened shop or promote a partnership with a related product.
Make a financial plan
The final section covers finance. Your vision, customers, the opportunity and your route to market all influence costs and income, so it makes sense to do this last.
That said, it may lead you to revise other areas of your plan – treat writing a business plan as a learning process.
You need to understand your costs to start up and trade. Every business is different, but key areas to consider are:
stock or raw materials
production
workspaces
marketing
Thinking about fixed and variable costs helps make sure you've identified everything. Fixed costs have to be paid no matter how many sales you make (for example, rent, wages or an accountant). Variable costs depend on the volume of sales you make (for example, stock and shipping).
Look for opportunities to beg, barter and borrow! Partners may be able to help get you access to workspaces or other support.
You can present costs as a simple list that shows how much you'll need to get started or you can create cash-flow forecasts and profit and loss reports that go into much more detail.
Cash-flow forecast: Shows the money going in and out of the business every month, with costs assigned to different expense types such as 'advertising' and 'rent'
Profit and loss forecast: Shows how much money the business makes each month
If you need funding to get started, include details in this section. You should also look to incorporate the following:
A detailed breakdown of your business finances
Your pricing against the costs of the product or service
How you deal with your debtors and creditors
Your business's legal structure (for example, do you operate as a limited company or a sole trader?)
Where you're trading from (i.e. is it a physical location or online only)?
As business owner, your personal financial statement or survival budget, if your business is a start-up or at an earlier stage of development
Top tips on writing a business plan
Granulate your plan into actionable and bitesize goals. And remember: make them SMART! (That's specific, measurable, achievable, realistic and timely.)
Be clear and use plain English. It's essential to avoid jargon, and explain any technical terms clearly. We all use acronyms at work, but don't overdo them. If you do use them, write what they stand for in brackets.
First impressions count! Don't forget to make your business plan look professional. When you build your plan, include a contents page, headers and section numbering. Put a cover on it if you'll be distributing hard copies.
Provide supporting documents. Include an appendix with products/services, expanded financial information and any literature on the business. You can also include bios for key personnel, such as the business owner and directors.
Include as much detail as you can but be succinct. Some people are visual readers. Use visuals such as infographics to illustrate key data and essential points. This is your opportunity to tell the story of your business, so use images and text to get your points across and connect with your target audience.
Show that you care about your business. That way others reading your business plan will care too!
Business plan templates
A business plan template provides structure when you're putting all this information together.
Enterprise Nation has created a start-up business plan template you can use, which includes a series of questions to ask yourself about starting a business.
Download Enterprise Nation's business plan template
Get feedback on your business plan
It's unlikely you'll have a complete understanding of the opportunity when you sit down to write your business plan, so go out and do research when it's needed.
This means speaking to customers, analysing competitors (try their products!) and speaking to suppliers.
Once you have a draft, show it to people in your network or other business owners who can provide feedback.
If you'd prefer to speak to a business expert, here are some advisers on Enterprise Nation who will help you write a business plan.
Will a business plan guarantee success?
No. But it'll help crystallise your goals and test your assumptions. The framework is really useful to develop ideas, particularly if they've been rattling around in your head for some time.
Make sure you return to your business plan regularly. Reinforcing your original goals will help keep you on track. Forecasting is a skill. Check your projections against performance and try to figure out what assumptions were correct and where there were issues.
The way you use business plans will evolve over time. Filling in a Lean Canvas might work if you have an idea and haven't started working on it yet. Eventually, you might need to create a business plan to land investment or it can provide an opportunity to reassess what you do.
Relevant resources