How to write a business plan
by Helen Munshi
A business plan is a written document that states what your business will do and how this will be achieved. It is usually 4–20 pages long, depending on how complicated your business is.
Writing a business plan helps you think through all the steps needed to start your business. It can help you decide if a business idea is worth pursuing. If you apply for funding for your business, the organisation will often want to see your business plan. Below is an example structure for a business plan.
Section 1 – Executive summary
Here, you summarise the main elements of the business. This section should not be more than one page long. It should tell the reader all the key information they will need about the business. List:
- the product or service that the business is going to sell
- the target market
- things that set you apart from the competition
- the goals of the business
- who is going to run the business
- the number of sales you forecast making
- the predicted profit for the first year
- whether you need a loan. If so, how much do you need and what will it be used for?
- the major achievements so far (eg sales made, suppliers contacted, employees hired, test trading etc)
Section 2 – about you
In this section you outline who you are, what experience you have and why you want to start the business. Include:
- the skills and experience you have that will help you run the business
- useful training courses you have done
- your skills from everyday life. For example, running a household will give you organisation, budgeting and time management skills.
- any experience you have that will help you run a business. This could be a job, work experience or volunteering in the local community.
- reasons why you want to run a business
reasons why you think this is the right business for you
- the skills, support, assets and resources you have that will help you
Section 3 – Business
In this section, explain what you will sell and how much you will charge. If you have more than one product or service, you should describe all of them. Include:
- details of all the products and/or services being sold.
- What does it look like?
- What is it used for?
- How will it benefit the customer?
- What is included in the product or service?
- What is the price?
- a detailed description of what makes the product or service different from others in the market
Section 4 – Target market
In this section you describe the people most likely to buy from the business.
- Are you selling to individuals or businesses?
- How old are your customers?
- What is their gender?
- Where do they live?
- What are their jobs?
- Where do they shop and how regularly?
- Do they have a family? If so, who is part of their family?
- What do they value?
- What is their lifestyle like?
- What do they want from the product or service?
- Do you have any customers waiting to buy your product or service? Provide details.
Section 5 – Market research
In this section you explain what the market is like, who the main competitors are and how they may affect the business. Include:
- the market that the business will be operating in
- the size of the market (sales per year, number of customers)
- the latest trends in the market
- things that impact the market (eg seasons, weather, trends, politics)
- a summary of the results of local market research, such as questionnaires or interviews with potential customers (see page 7)
- a summary of the results from any test trading that was carried out:
- How much did you sell?
- What did you learn?
- What would you do differently as a result of your test trading?
- a summary of how you have analysed your competitors:
- Who are your main competitors?
- What do they sell and for how much?
- Where are they selling?
- Who are they selling to?
- What are their strengths?
- What are their weaknesses?
- How will your business compete with them?
Section 6 – Marketing plan
Here, you explain how you will tell potential customers about your product or service. For each method of marketing you will use, cover the following questions:
- How will it help customers find out about the business?
- Why are you using this method?
- What is the cost?
- When and where will it be done?
- What results do you expect to get?
Section 7 – Operations plan
In this section you describe the everyday workings of the business and how you will deliver the products or services. Complete only the sections relevant to your business:
- Equipment. What equipment does the business need? Where will you get it from? Are you buying it or renting it? How much will it cost
- Payment. How will you take payment from your customers? Where will you store cash? How often will you do your book-keeping?
- Production. Detail every step of making your product.
- Suppliers. Who are you getting your supplies from? Do you have a backup supplier? What will you pay them? How do they take payment?
- Transport. What method of transport are you using? How much will it cost?
- Storage. Where will you store products and equipment? How much will it cost?
- Delivery to customer. How are you getting the product or service to the customer? How long will this take? Where are you selling? How much will delivery cost?
- Insurance. What insurance do you need? Where will you get it from? How much will it cost?
- Staff. If you need staff, outline what they will do in the business and how much you will pay them.
- Premises. Where are you running the business? How much rent will you be charged if you are hiring somewhere? What are the terms of the rental contract?
Section 8 – Financial plan
In this section you explain how the business will perform financially. You should include forecasts of the costs of providing the product/service, the sales you plan to make, and your cash flow forecast (see pages 12–13). Include:
- the assumptions you have made when putting together the sales, cost and cash flow forecasts
- things that will affect the financial performance of the business and how will you get around those risks
- how much you will need to pay to yourself in order to survive
- the first year headline financial figures (sales revenue, costs and profit)
- how much money you will need to start the business and where the money is coming from
- what you will use the start-up funding for
- how and when you will pay back the start-up funding
Helen Munshi is an enterprise strategy and training consultant.
Tips for writing a business plan
- Start with the ‘about you’ section – it is easiest to write about yourself.
- Leave the executive summary until the end. It is easier to summarise the plan once it is written.
- Keep it simple. Do not worry about using business language. Write in your own ‘voice’ so the reader understands who you are.
- Explain any technical terms clearly.
- Ask someone who does not know you or your business to read through the plan and give feedback. Do they understand what the business does and how it will achieve its goals?