How to write the perfect business plan
Your business plan is essentially a roadmap to success, so it’s essential to get it right.
When done right a business plan can help you to clarify your idea, identify potential problems, establish goals and measure your progress. But when done wrong it can hold your business back from reaching its potential.
This guide will show you exactly how to write the perfect business plan and maximise your company’s chances of success. We hope you find it useful.
1. What is a business plan?
A business plan is a written document that describes your business, the market in which it will operate, and how it aims to make money. It covers objectives, strategies, sales, marketing and financial forecasts. But, ultimately, your business plan tells the world why your business will succeed when so many others fail.
2. Why does your business need one?
You will need a business plan if you want to secure investment or some forms of finance. Many potential lenders will base their decision on what they find in your business plan. There are also many other benefits to having a business plan. It can help to convince customers, suppliers and potential employees to support you. But most importantly it will help your business to clarify your business idea, spot potential problems, set out your goals and measure your progress.
3. Who is it for?
Potential investors, the bank, customers, suppliers and even potential employees – anyone that you might need to convince to support your business. But it’s just as important to make a business plan for you. A good business plan will provide a blueprint for running your business and a series of benchmarks to check your progress against your objectives.
4. When should you write it?
There is a common misconception that you only need to write a business plan when starting a company. But this isn’t true. Whilst you will need a business plan at the start to create a clear vision of your business’s purpose and its goals, it’s equally important to regularly revisit and update your business plan as your company grows. To maximise its value your business plan should be a living, breathing document that grows with your business.
5. How long should it be?
There is no right or wrong answer and often the length varies from business to business. The best plans explain only the most important information – what you want to achieve, how you will get there and the things you need to do along the way.
So keep your business plan short by focusing only on what the reader needs to know. A good tip is to add an appendix at the end to include monthly projections, management CVs and other details that are too long for the main body of the plan.
6. What information should it include?
Executive summary – The executive summary outlines your business proposal and highlights the most important points about your business. Although it’s the first page of your business plan, a good tip is to write this page last. This summary should tell the reader exactly what you want to achieve. The following information should back it up.
Business description – A potential investor reading your business plan will be unfamiliar with your business, so make sure you explain exactly what your product or service is and what you will develop and offer in the future. You might want to include how long you’ve been developing the business, work carried out to date, any relevant experience and how your product will stand out. It’s also important to discuss any disadvantages or weaknesses, as doing this from the outset can inspire confidence.
Market and competitor analysis – In this section demonstrate your knowledge of the current market and competitors by answering the following questions. How big is your target market and how is it changing? What trends are impacting the market and how will this affect your success? Who are your competitors and what are their strengths and weaknesses? How will you gain a competitive advantage?
Sales and marketing approach – Showing how your product or service will meet your customers’ specific needs often gives a good indication of the business’s chances of success. In this section highlight exactly who your target customers are and how you will reach them. How will you sell to your target market? And what promotional tactics and marketing channels will you use to make your brand appealing to them?
Management and operations plan – It’s important to show why potential investors should have faith in the management of your business. So make sure you outline the management skills within your team by describing the background and experience of each team member. Show how you intend to cover the key areas of production, sales, marketing, finance and administration. Most importantly, highlight how committed you are to the business through how much time and money each of the team will contribute and what your salaries and benefits will be.
Financial forecasts – Your financial forecasts should translate everything you have already said about your business into numbers. Demonstrate that you have considered all the key factors that could impact your cash flow and show when there will be more money coming in than going out. When seeking funding it’s important to answer the following questions: How much external funding will you need? Where will these funds be invested? What are your projected revenues and profits over the next one to five years? And what assets will you need to acquire?
7. How do you make it engaging?
Once you have the content perfected it’s also important to make the physical look and feel of your text inviting. Make it professional by giving it a well-designed front cover and title. You will also want to include a contents page to make it easily navigable.
Using charts is a good way to make your important numbers easier to understand. Equally, product and location shots, menus, blueprints, floor plans, logos and signage photos can all be useful ways to back up your content and also make your plan more engaging. And, don’t forget the importance of formatting your text to make it easily digestible. Stick to one or two fonts and use page breaks, subheadings, bullet points and white space to separate your text and make it easy to read.
8. What mistakes should you avoid?
As well as things you should include you also need to be aware of what not to include. For example, don’t use long, complicated sentences and avoid buzzwords, jargon and acronyms. Instead use simple, straightforward language to get your message across in the clearest and most concise way possible. Also, avoid small fonts and only include charts or images if you reference them in the text, and always provide related details in the appendix.
9. How do you know if it’s finished?
A business plan will never truly be finished. As your business changes, so should your plan and, as we’ve said before, you should regularly revisit and update it for it to remain effective. But there are things you can do to polish it before submitting it to a potential investor. First, re-read it. Does your plan fulfil the objectives? Then, always proofread carefully to check for spelling, grammatical and numerical mistakes. And, when you are happy with your plan, test it. Give it to a friend, colleague or expert adviser and ask for their feedback.
10. One last suggestion…
Whilst the tips above can help you to create a perfect business plan don’t get too bogged down with design, formatting and length. Yes it’s important, but ultimately there is no point having a business plan that looks good if it lacks the facts, research and passion to back up your business idea.