A business plan is an overview of your business life cycle from the beginning to its foreseeable future. The plan should be short, concise, specific to the points, and realistic with factual information.
Business plan to seek fundings
Writing your business plan can is like writing your Curriculum Vitae (CV) when you start looking for a job. You want to catch the attention of your potential employers that you are a good candidate and can do a great job. The important question to bear in mind when writing your CV is, why should your potential employer hire you?
Whereas in writing your business plan would be, why the investors and/or the banks should invest or lend you money to fund your business idea? For example, you want to borrow a £100,000 loan from a bank and the interest rate is 3% and repayment over 5 years. If your business plan can convince the bank you can succeed and the risk of bad debt from your business idea is very low, the bank is more likely to lend the money to you because they can earn interest income (in this case, the interest income would be £3,000) from the loan you take. Likewise, the investors are more likely to invest in your business when they see your business would be profitable and that they can recoup their investment from you with extra earnings.
Even if you do not require funding for your business. It is good to have one and use it as your continuing business reference guide.
Put your thoughts on paper
Every business idea is born from our thought. Greg Reid’s famous quote explained why putting your thought on paper would help you to succeed in three sentences.
“A dream written down with a date becomes a goal. A goal broken down into steps becomes a plan. A plan backed by action makes your dreams come true.”Greg Reid
Business plan format
Generally, a good business plan should cover the following aspects.
Your business plan helps you to prioritize your work according to business operations needs and it also can be used as a yardstick to measure the progress of your business.
1. Executive summary
In your executive summary, you would write about your business idea in brief, objectives, and financial summary. this includes your business name, strapline, and elevator pitch.
2. Owner’s background
The Owner’s background section is basically writing your own mini CV here. The information you would write in the section include the following:
- The reason you want to start your own business.
- Your current and previous work experiences.
- Your qualifications and education.
- Training to be completed, if any.
- Hobbies and interests.
- any other information that is relevant to your business idea.
3. Your products and services
You would write down all the products and services you are going to sell. This includes describing the basic and different types of products and services you are going to sell.
Give your products and services launch date and if you are not going to sell your products and services at the start of your business, explain your reasons and provide the expected launch date.
4. Know your market
You must know your market. For example, if your products and services are designed to meet the needs of individuals or businesses, or both. In other words, your business is to cater for B2C (business to consumer customer) or B2B (business to business customer).
For example, Concise accountancy’s business is to sell accountancy services to mainly B2B customers. Concise’s accountants prepare and submit confirmation statement, company accounts, and tax returns for limited companies registered with Companies House. A limited company is considered a business.
Other factors to elaborate under this “know your market” section are:
- Where are your customers based?
- Why your target customers would buy from your business instead of your competitors?
- Have started selling to your target customers already or not?
- Do you have customers waiting to buy your products or services?
5. Market research
State what types of market research have you carried out to support your products and services and commercially feasible and viable and there would be good demand to make profit from them.
There are different types of research you can do: desk research and field research. Desk research is basically a review of previous research findings done by others. Desk research is also known as secondary research.
Whereas field research is primary research that involves collecting data from consumers. For example, you can use customers questionnaires. There are many online survey platforms you can use to conduct your field survey. Hubspot.com has listed the following as the best and totally free online survey tools.
HubSpot, SurveyMonkey, SurveySparrow, ProProfs Survey Maker, SoGoSurvey, Typeform, Survicate, Qualtrics, SurveyPlan, Google Forms, Alchemer, SurveyLegend, Zoho Survey, Crowdsignal, Survs, FreeOnlineSurveysHubspot.com
6. Marketing strategy
You state how are you going to market your products and services, why you choose the marketing methods, and the costs. For example, you use Facebook Ads to build your business fans page and you budget £200 per month to increase fans base from 0 to 1000 in 3 months and so on. Be a bit more details about your marketing strategy.
7. Competitors analysis
Under competitors analysis, you can break it down into three categories:
a. Direct competitors analysis, this includes your competitor’s products and services, pricing, location, strengths and weaknesses.
b. SWOT analysis. SWOT is basically analyzing your business’s strengths, Weaknesses, Opportunities, and threats and address those areas accordingly.
c. what is your Unique Selling Point (USP). For example, Concise’s aim is to submit a customer’s confirmation statement to Companies House within 24 hours upon receiving their online order and a human accountant would process the submission paperwork.
8. Your business Operations
- Who will produce your products and provide your services?
- How are you going to deliver your products and services?
- How your customers going to pay you? and payments terms
- Who are your suppliers? payment terms arranged and why choose them?
- Premises – office, factory, retail unit if applicable.
- Insurance and legal obligations
- Staffing and management
9. Costs and pricing strategy
Calculate your costs of production per unit then decide your selling price based on your desired profit margin. For example, the cost of producing a notebook is £1 and you would like to make a profit of £5, in this case, your selling price would be £6 and your profit margin percentage would be 500%. Also, include how many units you intend to produce.
10. Financial forecast
In this section, you input your financial forecast. for example, estimated sales and cost for the next 12 months. and, how do you arrive at the estimation, for instance, in the summer months ice cream sales would increase because of hot weather.
In addition, provide your personal survival budget, your income from employment, full-time and part-time jobs, your living costs include mortgage payments, council tax, etc.
Remember to include your cash flow analysis as well.
You can hire an accountant to help you with your financial forecast.
11. Your exit plan
What are your business’s short-term and long-term plans? For example, you would start your business using a limited company. You plan to list your company on the stock exchange within 10 years. and, you have a plan of when to re-register your private limited company to a public limited company.
Do you have any plan B? in case your plan not going well.
In short, writing a business plan allows you to see a big picture of your business journey and provides you with a clear direction.
Do not rush, take your time to compile the information.