The mere thought of putting a business plan together can send even the most enthusiastic entrepreneur into a tailspin, but writing one can help you work out whether you actually have a viable business idea on your hands.
First and foremost, the person who must be convinced by your business plan is you. After all, if you’re not persuaded by it, why should anyone else be?
Once you’re sold on the basics, you can use your business plan to convince potential sources of finance, investors, partners, and employees that you’re the real deal.
This jargon-free article will give you a better idea of how to get the ball rolling.
The executive summary highlights and emphasises the main points of your business. No more than a page in length, the executive summary needs to be succinct, compelling, and engaging - you want the reader / potential investor to be interested enough to read on and, even better, buy into your business.
This section should help the reader understand the purpose and passion behind your business. You’ll need to include brief outlines of:
- Your business name and location
- A short, simple summary of your business concept
- When were you founded?
- A description of your business’ competitive advantages
- Proof that there’s a market for your product or service
- A summary of the management team you’ve assembled
- A brief description of at what stage of development your business is in
- What is your background and experience, if any?
- What was your decision making process?
- When did the initial idea occur?
- Where will the business operate?
- How long is the lease, if you have one?
- Why - the mission statement of your business
You’ll be elaborating on most of these themes throughout the document, so keep it fairly succinct. Revisit the content once you’ve finished the rest of the business plan - you might find better ways to express your ideas.
Products and services
This is your opportunity to really wax lyrical about the core aspect of your business: what you’re going to be selling. You want complete belief from the reader that your product is the best out there, and for them to see why they should invest.
Here’s what you need to include:
- What is your product or service?
- Why should customers purchase from you?
- How do you aim to sell your product or service?
- How are your products manufactured?
- Do you have any exclusive deals or partnerships?
- What is your pricing strategy?
- What problems, if any, do you see with your product or service? What are the benefits to the customer?
- How will the product be sold - online or retail?
- What makes your product or service stand out?
Your business plan needs to detail specifically who is involved in your business.
You want this particular section of your business plan to highlight that you have a more-than-capable team running your business, a team that will use their expertises to make the business work and profit.
Make a list or tree diagram of people's responsibilities, and attach CVs as appendices if you feel this supports your choices.
You’ll need to include:
- Who owns the business?
- Who are the directors and shareholders?
- Who will be involved in the day-to-day running of the business?
- What experience do these people have and how will this benefit the business?
- Who is your management team?
- What experience do they have?
- Who has direct reports?
- Do you have any vacancies yet to be filled?
- What is your recruitment process?
The marketing section is key in showing a potential investor that you know how you will bring in custom. It needs to show you’ve thought about how to get people interested in your business, and what makes it different from competitors in your market or area.
How you promote your business will differ depending on how you’ll make sales. If you’re opening a shop you’ll need to employ some local marketing techniques (think print adverts, flyers, broadcast media etc.) but if you’ll be selling online you should consider search marketing and social media promotion.
What to include can be broken down into four sections - the four P’s:
Who are you aiming your product at? Who is your target market? For example, “22-34, London based, interested in photography and male”.
What is the price of your product/service? How did you arrive at this price point?
How does this compare with other products in your market? What budget have you set aside for marketing?
How and where are you going to distribute your product/service? Retail, wholesale or online? For e-commerce, you’ll need to show you can drive traffic to your website, and with retail you’ll need to show you understand the importance of putting your product in the right shop/area.
How are you going to promote your business? How and where will you advertise?
Think about the methods mentioned in the opening paragraph - will any of these help get your business noticed?
The operations section of your business plan deep-dives into the logistical side of your idea. It highlights that you have thought concisely about the day-to-day running of your business. It needs to highlight and set clear expectations of exactly how your business will operate, and include details of the following:
Now is the time to be more specific about where you are based. Are there any works that need carrying out? Is there adequate parking? What licence do you need (if any)? Is there scope for you to develop a hybrid working space - could this suit your goals and how would it function?
Facilities and utilities
Does your location have internet access? Who will supply your water, gas and electricity?
How will you store and track your assets, stock, equipment?
What are your hours of trading? Are these flexible?
What payment systems will you have in place? Do you accept AmEx or contactless?
Do you need to invoice clients?
How many members of staff will you need? What will their duties be?
What is the customer journey? What is your refund policy? How will customer complaints be handled?
A financial plan helps a potential investor think about whether they are likely to get a healthy return on investment (ROI). For this reason, it’s likely to be the most scrutinised section of your business plan.
If your business is brand new, think about how you’ll show predicted earnings - or you might want to outline any plans to scale up, including any intentions you have to access help in the form of an unsecured loan to grow your business. You could even look at a company similar to yours and what their earnings have been to compare. You’ll also need to include details of the following:
Profit and loss
Also known as an income statement, the profit and loss statement measures just that: the profit and loss of your business over a specific period. This takes information from the following equation:
Revenue - Cost of goods - Expenses = Net
Cashflow shows how much money is going in and out of your business. Think of cashflow as money management. Much like your personal finances, you need money coming in before you can take money out. If you spend money you don’t have coming in, this will amount to debt - this isn’t something an investor will look favourably upon.
Compiled on an annual basis, the balance sheet gives a picture of the financial state of your business. Include assets, liabilities, and equity (see glossary on next page).
Forecasting shows the depth of knowledge of your business. Break this section down into manageable parts, showing estimated sales by month over 12 months, then each year over five years. As with profit and loss, it’s important to be realistic, otherwise you will lose credibility.
Glossary of terms
Unsure of the difference between cash-flow and capital? While we do our best to avoid jargon, it’s important to understand the terminology when starting a business. To help you write your business plan, we’ve compiled a glossary of the most-used business terms and have provided easy-to-understand definitions.
An item owned by a business that has monetary value, for example, property, cash in the bank or inventory.
Lists the assets, liabilities, and equity of a business in order to calculate net worth.
An organisation that trades in goods or services.
Wealth owned by a person or business that is available for reinvestment in the company.
The amount of money being transferred in and out of a business.
A person who runs a limited company, often owning shares in the company.
A person who works for wages or salary in a business.
A person who employs people and pays them a wage or salary.
The value of the shares issued by a company.
A calculated estimation of future financial outcomes for a business.
A business licence granted by a company that enables a party (franchise) to market its products or services. For example, Ben and Jerry’s is the company, and the parlours where you buy the ice-cream are a franchise.
The items or stock owned by a business.
A person who invests money or capital into a business with an expectation of future financial return.
A company’s legal debts, for example, loans, mortgages or accounts payable.
An organisation set up to run a business, which is responsible for everything it does. Finances are separate from personal finances, and Directors are responsible for decisions which affect the company.
Total assets of a business minus total liabilities. Determines the value of a company, for example, a business has £50,000 in cash, £200,000 of inventory and £20,000 in savings = £270,000 in assets. The business also has a £100,000 mortgage and £10,000 credit card debt (liabilities). Therefore the total net worth is £160,000.
Profit and loss
An account showing a businesses net profit and loss over a given time frame.
Prediction of future sales.
A person who owns shares in a company or business, whose rights are often governed by a Shareholders’ Agreement.
A portion of the company’s ownership divided amongst shareholders, giving the owner a proportion of the company.
A person who is exclusively the owner of a business and solely responsible for all profits and losses of that business.
A new business.
A group of consumers at which a product is aimed. For example, sweets are often aimed at a target market of small children.
A company that acts as an employer to agency contractors and processes their payments.
Keeping track of your accounting & finances
Ensuring you have a great accounting and financial plan is essential. Using a simple to navigate accounting system can be a perfect option. Why not consider using Crunch’s software? Not only is it easy to use, but it also comes with support from our experts who can guide you through your accounting tasks and tracking your finances. We also have a ton of Crunch integrations, providing our clients with even more tools to run their businesses efficiently. For example, our integration with financial forecasting software Brixx allows you to project your business's financial future so you can test scenarios and be prepared for any eventuality. This is also a great tool to have when preparing your business plan.
We're comitted to helping new businesses thrive, and to encourage this we've shared lots of free resources - from in-depth business guides to blank invoice templates, we're here to help you succeed. To find more ways that Crunch can help make running your business effortless, join us online for 14 days completely free, or get in touch with our friendly advisors at a time that suits you. Alternatively, read our complete free guide to writing a business plan for lots of in-depth, interesting insights and considerations.