Writing a business plan is one of the first things you should do when setting up a business. It might seem like a chore and not the most exciting thing to kick off your entrepreneurial journey with but it is important you write one.
In this blog I will share 5 reasons why you should be writing a business plan and what you should be including in yours!
Let’s go!
Along with your business idea, it is likely you will also have lots of different ideas about what your business’ overall aims and objectives are. The best way I have found to clarify these thoughts and come up with an overall “direction” is by writing them down. Looking at multiple thoughts on a piece of paper is much more productive then a single thought in your head. This is true for all aspects of your business, not just for your business’ overall aims and objectives.
You’ll have lots of ideas around your business. These may include different monetising methods, different marketing methods, different product/service options etc etc. What ever these ideas are, as amazing as our brains are it is unlikely you’ll remember every idea you’ve had for your business. By writing them down you can make sure you don’t forget them.
By writing all your thoughts down in a business plan (regardless of whether they’re relevant for the stage of your business at that moment), when you have days where you’re not sure what to work on next you can refer back to the document for direction. If written properly it will act as a road map and lead your business to success.
There is a lot to think about when starting a business and even if it’s not your first business, it is likely there will be some things you’ve overlooked. Fortunately, by writing a business plan (and using a good business plan template) you’re forced to think about all aspects of your business. It’ll make you define your product/service and how you deliver it, your monetising model, your target audience, any competition, marketing methods etc etc.
If you want to open a separate business bank account (which is essential if you’re going to run your business as a limited company) you will need to have written a business plan. The reason for this is because one of the requirements of opening a business bank account is presenting the bank with a business plan. In addition, if you plan to take out a business bank loan or raise private investment, any lender will want to see a business plan before they lend.
Writing a business plan doesn’t need to be a chore if you know what to include in it. Here are the 5 sections every business plan should have and what you should be including in them:
The first part of any business plan is an executive summary. An executive summary is an overview of the main points of a business plan. You will want to create a brief summary of the below headings.
Using the following headings, write a detailed description of your business:
2.1 The Opportunity
2.2 Aims & Objectives
2.3 Products & Services
2.4 Customers
2.5 Marketing Strategy
Using the following headings, write a detailed description of your business’ market:
3.1 Market Research
3.2 Competitor Analysis & Competitive Advantage
To complete this section it is best to first produce a financial forecast of your business on Google Sheets or Microsoft Excel which forecasts your business’ finances for a minimum of 3 years. This forecast should include the following sheets:
Sales and Revenue
Costs
Cash Flow
Profit and Loss
Once you have produced a financial forecast you’ll then be able to write a detailed description of your business’ finances using the following headings:
4.1 Revenue Model
4.2 Sales & Revenue Projections
4.3 Costs Projections
4.4 Cash Flow Forecast
4.5 Profit & Loss Forecast
4.6 Investment/Funding Required
Write a short paragraph for each person involved in the business, including details of the following: education, qualifications, previous experience, training, hobbies and interests.
These are the 5 things you should be including in your business plan. For more detailed guidance of how to complete these sections you can buy and download my Business Plan Guide. This 41 page document provides detailed guidance on how to complete each section and equips you with essential tips, templates and tools, it is a must for anyone serious about writing a business plan. Included with the guide is a business plan template, one-page business plan template and financial forecast modelling tool.
In conclusion, a business plan is crucial as it helps to outline your business’ roadmap to success. Each section of your business plan makes you think about a different element of your business and adds depth and clarity to your business, helping you understand your business better and communicate its potential to others. If you have any questions about anything in this blog, please drop me an email at lawrence@thesmallbusinesstoolbox.co.uk.
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