How to Create a Business Plan
If you’re not sure if a business plan is REALLY necessary or think that is sounds like an awful lot of work then I recommend first heading over to my article on ‘The Importance of Having a Business Plan‘ before you read any further.
Assuming you’ve done that already, or are fully committed to the importance of this task – we’ll get stuck right in!
This article will walk you step by step through all the sections of your business plan. Don’t expect to get it all done in one sitting – there’s a lot to think about and will be a fair amount of research to do too. It’s a big undertaking and will be a working document that you will use and review time and time again.
There are lots of different ways of writing a business plan – some are pages and pages long and go into huge amounts of detail. These are mainly relevant to large corporations. Equally it’s possible to contain your business plan into just a couple of pages.
I’ve provided enough information below to assist you to produce a business plan for the start up or growth of a small business that may need to acquire finance. By all means, if you feel some sections are not relevant to you, please skip them. You can always come back later.
If you’d like a template for your business plan, give me a call.
Title Page – Your logo, Company Name, Date of Launch (you may need to complete this later) and today’s date
Your Why – This may seem a bit of a silly thing to do, but your ‘why’ will carry you through all the challenging times and hard work to come. It’s not enough to just know what your ‘why’ is, you need to write it down and read it back to yourself whenever you’re having a bit of a wobble. So why are you doing this? Be specific – don’t just put ‘a better life for your family’ – what does a better life look like? To be able to afford music lessons for your daughter? Or to be able to take everyone on an amazing holiday? Or simply to be able to quit your day job so that you can focus more on your family and pick the kids up from school? Maybe having a business of your own and not having to work for anyone else, to be able to call the shots and decide every day what you’re going to do is your ‘why’. Have this on a separate page. If you’re providing your business plan to someone as part of an application for funding, swap out this page for your ‘Executive Summary’ page.
Executive Summary – Your summary should tell the reader what it is that you want. It should be short, and business like – no more than half a page. You will generally only include the executive summary when providing your business plan to potential investors. You should include;
- Your business concept – what will be sold, to whom and why you’re different from your competitors.
- Financial highlights – sales, profits, cash flows and return on investment. Obviously this will be predictions if you’re a new start up.
- Financial requirements – any capital needed and any equity, if any, that will be provided against funding.
- Business history – when the company was formed, principle owners and key personnel
- Achievements – any historical achievements including patents and big wins
Business Description – Start by describing the industry your business is in. The present outlook as well as future possibilities. Include any new products or developments that will benefit or adversely affect your business. Next describe your business, your products and/or services. Who are your customers? Now and in the future. How will you be better than your competitors? Describe where your business is to date and give details of any history if you’re business is already up and running. Briefly touch on your end goal. If you’re planning on using this business plan to help you to obtain funds or investment then you will also need to include detail here on why your business is going to be profitable. What makes your product or service special? Investors will want to hear about suppliers, potential clients or industries experts that you’ve spoken to about your company – and what their response was.
Products / Services and Pricing – Describe your products and/or services. What benefits do they offer potentially over and above your suppliers. Why did you choose to work with these products or services? Let your passion shine through about what you want to offer. Are there any disadvantages or foreseeable issues with what you plan to offer and how might you overcome these problems? Describe any planned developments to products/services or any plans to extend what you are offering. Throughout, avoid technical jargon if you can.
Target Market/s – Who will you be selling to? Give general details of each group you will target (this will be done in much more detail within your marketing strategy – I explain there how to define your segmented marketing groups). How large are each of the groups? Are there any current trends that may affect the growth or decline of any of these groups.
Competition – Who is your competition? What products/services do they offer? Why will customers buy from you instead? This isn’t an opportunity to slate your competition but a time to be honest with yourself – and with any potential lender that there is competition out there and that you know what you’re up against.
Suppliers – Who will be the main suppliers to your business (if relevant). What agreements do you already have in place with them?
SWOT analysis – Flashback to business studies classes at school? SWOT analysis is more about the process than the end result. Done correctly – and thoroughly – it can really get you thinking…and can also steer you clear of potentially making some pretty huge mistakes. This is one part of your business plan that you should definitely revisit and revise frequently and it should have a page of it’s own. So..for those of you that don’t remember – SWOT stands for strengths, weaknesses, opportunities and threats. Your strengths might be a unique product or offering a product or service that isn’t currently available in your area (assuming it’s something that is needed). You weaknesses might be a lack of finance or time. Opportunities might include a collaboration with other businesses or even a competitor going bust. And threats might include competitors moving in….or a foreseen economic downturn. Once you’ve outlined your ‘SWOT’ be sure to specify what actions you’re going to take to make the most of opportunities and to mitigate threats.
Goals are just dreams with deadlines!
Goal planning – So many people skip goal planning (well…actually many people skip any sort of planning but you’re obviously not one of them otherwise you wouldn’t be here!) but it’s such a worthwhile exercise. It’s been proven time and time again that you are so much more likely to achieve your goals if you write them down. Even if you decide to skip the rest of the business planning, please try to find time for this. There are several pages in the business planning template attached relating to goal planning.
Ideally you should set goals for 3 months, 6 months, 12 months, and 3 years and preferably you should have them in a chart where you can see them daily and can add in the date that you achieve them. There are 3 types of goals; smart, hard and financial.
All are equally valuable – each to their own but it’s a good idea to have goals from all 3 categories. Why don’t you share your goals with us in the community?
How much you’re hoping to turn over and to profit in specific timescales. Ideally you will include a 12 month and 3 year profit and loss forecast here. Give me a call if you’re not sure how to do this.
Forbes’ defines hard goals as “ultimate, long-term, broad outcomes that an organisation wants.” Basically a hard goal is something you want your business to achieve. It doesn’t have to be measurable but it does need to be both specific and challenging. An example HARD goal can be as simple as ‘I want to start my own company’! You can use the following to help you set your ‘hard’ goals.
H is for Heartfelt: How much do you want it? Are you passionate about it? Does it help to move you towards what you want – or help you to avoid what you don’t want? The more you want it, the more you’re likely to achieve it!
A is for Animated: How would life look if you achieved your goal? You need to connect with the goal – be able to close your eyes and really visualize it! Ever heard of a vision board? It’s basically a poster that you create that you can see while you’re working that uses words and imagery to illustrate your dream…
R is for Required: Is the goal absolutely necessary for your own or your company’s success? If the answer is no – then it’s not a ‘Hard’ goal and down the road you’ll be less likely to care if you achieve it or not!
D is for Difficult: If it’s really easy then why haven’t you already done it? Your goal needs to inspire you – it needs to be something that you find difficult and will stretch you out of both your current skills and comfort zones.
Setting SMART goals is another option and one you may be more familiar with:
S is for Specific: You need to clearly define what it is that you need to do. Ask yourself how much, what kind etc
M is for Measurable: If your goal can’t be measured then it isn’t ‘SMART’. For example, a goal of ‘selling more potatoes’ isn’t measurable. A goal of increasing potato sales by 30% in the next 8 weeks is – it makes the goal both quantifiable and gives you a clear timescale with which to measure success.
A is for Achievable: Is your goal realistic in terms of the skills you need to achieve it, the time frame with which you’ve given yourself to complete it and is there anything that will get in your way?
R is for relevant: Is this goal relevant to your overall vision of your business?
T is for Timescales: Have you given your goal a realistic time frame within which to achieve it?
Congratulations – completing your business plan is a hard task but will set you such a solid footing as to where you go next, it is undoubtedly worth the effort!
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