how to write a business plan

Clear Books Must reads | November 2015

How to write a business plan

A lot of small business owners get really intimidated at the idea of writing a business plan — it seems so formal and cumbersome. But actually, a business plan is just that: a plan that helps you get a sense of where you’re heading with your business, how you’ll know when you get there, and why you’re doing it to begin with.

While it’s a great thing to do no matter where you are with your business development, it’s especially important if you need to get other people, like employees, suppliers, investors, or bankers on board with your business.


Benefits of a business planA business plan helps you to get really focused on the core mission of your business, the logistics of how you’re going to make that happen, and how you’re going to know when you’ve succeeded.

Contrary to what you might think, you may not need a business plan at the very beginning. If you don’t have employees, need investment, or need any other kindof backing from someone else, you are often better off to just focus on getting your business off the ground.

Tim says…“I had no business plan at all when I started Clear Books … because I wasn’t raising investment or anything like that I didn’t need a plan to persuade anyone to back me. I simply needed a product that worked as goal one.”

That being said, creating a business plan in the beginning can be a good way to sanity check what you’re doing and challenge your own assumptions … so it’s up to you.

Elements of a business planWhat exactly you should include in your business plan varies from industry to industry, and depending on who you’re showing it to, but there are some basic elements of a business plan that apply no matter what.

Executive summary

This is the bit that gives an overview of the entire business plan, so you need to include a short mission statement, a clear, succinct description of what the business is and how it works, the end goal of running the business, the milestones that are going to let you know whether you’re progressing towards that goal or not, and a short overview of your financial projections and needs. Even though this goes at the beginning of the business plan you’ll usually write this last, after you’ve tied everything else together.


Tim says…“Knowing you purpose reminds your team why you’re all coming into work every day. If it’s just to get paid then that’s not very inspiring or motivating. But if it’s to save people time then that’s a higher vocation that’s helping the small business community.”

Your core beliefs, purpose, and mission

This is often the first part of the plan that you write. Don’t gloss over this; really get a sense of why you’re doing what you’re doing. This is going to inform every aspect of your business branding, development, and operations going forwards, so make sure it’s really aligned with your beliefs and way of doing business.

Your business

This is the part where you lay out the practical elements of your business, including the products or services that you’ll be selling, your plan for marketing them, the way that you anticipate your business developing, and the key people who will be involved in that process, including employees, consultants, and suppliers. Finally, you need to create a clear timeline of how your business is going to grow, with milestones that will let you know whether you’re making progress or not, and a clear exit plan if it turns out that you aren’t progressing like you anticipated.

Your market

You need to demonstrate that you have a clear understanding of your target market before you can get anyone to invest in you, so make sure you really research it. Focus on getting concrete information about your target market, including demographics, statistics about their buying habits and preferences as related to your product or service, and why they’re going to want to buy from you instead of your competition.

Your competition

Similarly to the section on your market, the section on your competition should show that you have a really clear understanding of who your main competitors are, your Unique Selling Proposition (USP) compared to them, and the specific threats they make to your business and how you’ll overcome them. Again, hard data is much more convincing than guesses and generalities.


Finances

You’ll also need to include specific information about the finances of your business, including a financial forecast (including data about why you’re confident in those projections), and information about any outside financing you’ll need. Remember to cover your sales forecasts, direct costs and overheads, fixed assets, and any investments, loans, and grants you have or need. Even if you don’t have a regular accountant, it can be worth getting in touch with an accountant for help with this part, since they can give you a good idea of how your finances will likely play out.

Appendices

This is where you include all of that hard data that you’ve collected. Be really certain that you include data to back up any claims you make throughout the plan, and try to arrange it in a way that makes it easy for your readers to reference.

Pitfalls!Being wordy or unclear. Be clear and concise — the people who are reading your plan need to be able to quickly understand what you’re saying about your business . Besides, if you can’t clearly express what you’re trying to do and how you’re going to do it in your business, it may be a sign that you actually aren’t clear on it yet.

Not doing the research, or not showing the research. Whatever statements you make in your business plan, you need to have hard data to back them up.

Making it and forgetting it. Once you’ve got your business plan, it’s important that you actually follow it — don’t spend all the time and effort on making it and then stick it in a drawer and forget about it.

Sticking to it blindly. That being said, you do need to re-evaluate your business plan periodically, especially before you start a new project.

Tim says…“The biggest mistakes people make with business plans is you forget about them, you don’t stay true to them, or you don’t apply them in everything you do. They need to be put on a wall so they are visible, and they need to be reviewed every time you start a new project to ensure you are still fulfilling your core vision.”


Remember…A good business plan helps you focus your purpose, gives you a set of milestones to measure your progress against, and is key if you need to get support from other people, including employees, investors, suppliers, or bankers.

The main purpose is to show that you have a clear idea of how you’re going to run the business, what your cashflow is going to look like, and that you have a sense of your USP, the market, and your customers.

You might not need one in the beginning, but doing one anyway can help you challenge your assumptions about your business and get clear on what you want to do.

There are specific structures to follow for different industries and depending on who you’re showing it to, so don’t just wing it.

It’s important to make sure that you actually use the business plan once you’ve made it. Don’t just make it and forget about it.

Re-evaluate your business plan regularly.


Further reading

Writing a business plan - Startup Donut

Sample business plans - Smarta

Example business plan - Lloyd’s Bank

Write a business plan - gov.uk

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how to write a business plan

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