Writing a Business Plan Sounds Simple But, What is Actually Involved?

Firstly, what is a business plan and why are they written?

A business plan is a tool which most business has, to outline its purpose and goals. All aspects of the business are included such as; marketing, finance, personnel.

Typically, it is written for the following:

1. To evaluate an idea and ensure it can be viable
2. As a method to plan operations
3. To see any problems and work on overcoming them
4. Creating objectives and the financial return expected
5. To convince investors, banks and/or shareholders to invest and support the company

Writing The Business Plan

• Keep the plan short and simple, so readers can easily access the relevant information. Any detailed information, such as data from market research or CVs of key personnel, should be kept in an appendix.
• Use a professional layout. To be included is a contents page, cover page, executive summary and any data and charts.
• Be realistic with all information – do not over-optimise forecasts.

What to Include

1. Business and Products

A key part of the business plan is the business’ details. This includes the ownership structure, business history, date founded, and industry overview. Also, it should outline simply, what the product or service is – does it have a unique selling point? Are you planning any changes or improvements in the future? What are the benefits? What are the disadvantages and how will these be eliminated? What are the business objectives? How will you ensure these are met?

2. Market and Competition

It is important to carry out an evaluation to your companies market sector and competitors, so you are aware of any threat and can act accordingly, with the best chance of succeeding.

• What is your companies’ market share?
• What important trends are occurring in your market? Any changing tastes?
• What key features exist for customers in your market? What influences their purchase decision?
• Do you have a heavy concentration of sales focused on a specific group of customers?
• Do you have any competition? If so, who and how do they differ?

3. Marketing and Sales

This is essential as this section explains the strategy. You should describe your business in terms of the 4P’s:

• Where do you position your product or service in the market? High or low quality and price? Are there any unique benefits for the customer?
• How price sensitive are your customers? What pricing method do you intend to use and why? do you have repeat customers?
• How will you promote your product or service? How will goods and services be sold? Is this method cost-effective?
• How will you reach your end customer? What is the distribution channel like?

4. Management and Personnel

Indicate the businesses structure and key personnel. What recruitment and training plans do you have? How motivated is the workforce? Could this be improved? If so, how? How do you plan to cope with the loss of a key worker or with a labor shortage?

5. Operations

This section explains how you transform inputs to outputs, to create the product or service. What production facilities and premises do you have? Do you look to expand or move in the future? How is production organized? What is your capacity? What management and IT systems are in place, are they reliable? What regulatory standards are followed?

6. Financial Performance

This is the numerical part of your plan, using figures to support your business plan. See a small business advisor, bank, or financial advisor for help with this. Required here is:

• Historical financial information for the last 3-5 years (Total sales figures, the gross margin for each sales component, capital expenditure, direct costs, indirect costs, working capital). An up-to-date balance sheet and a profit and loss account is expected here. If there has been change in profitability, working capital and/or cash flow figures, justified reasons should be given.
• A forecast for the next 3 years; being realistic and considering scenarios of ‘what-if’.
• Include a list of assumptions regarding how long it will take to collect debtors’ payments, what interest rate you will pay, what credit suppliers will offer you and the profit margin of each product.

7. SWOT Analysis

This is vital. A SWOT analysis is an honest analysis to illustrate your understanding of your business and the external factors which could affect it.

• Strengths: an internal audit of your company – what advantages do you provide? What USP do you have?
• Weaknesses: an internal audit of areas your company may need improving in.
• Opportunities: are there any market gaps which you could enter? What current trends are there in the market?
• Threats: what external obstacles do you face? A PESTLE analysis can help here.

So, there you have it, an outline of what is included in a typical business plan. Remember, it is never too late or early! if you have an idea…get planning and write your business plan now.

Author Bio:

Rebecca Dunne, the author, is a University of Hertfordshire Management Undergraduate and the freelance writer for KSA Group, who have Licensed Insolvency Practitioners in the UK, established in 2000. KSA Group run CompanyRescue which contains over 2000 pages of useful information for struggling businesses.