Creating a Business Plan12th February 2018
Creating a business plan is vital. About 30% of start-ups fail within the first two years and 50% in the first five. Those that surpass this are those who have planned properly, and this is done by putting together a thorough and well thought out business plan. This is the framework that start-up businesses base their strategies, goals and objectives on and is key for any business wanting to increase their chances of sticking around long term. It can be daunting to write a business plan, but there are some ways of making the journey easier, and what follows is a brief overview. Work Avenue advisers can guide you through the process:
- Executive Summary
The first part of the business plan will be your executive summary. This is the most important part of the plan as it sets up the rest of the document to the reader. Often, the reader of your business plan is an investor, who receives hundreds of similar documents on a regular basis. The best way to ensure full readership of the whole plan is to distinguish yourself from other businesses with an engaging, concise (up to two pages) but detailed explanation of your business, including a summary of the business idea, aims, financial summary, elevator pitch and strapline if you need one. A handy tip for your executive summary is to write it last, once you have gathered all of your market research and information as it summarises the entire business plan.
- What should be covered?
A business plan ideally needs to cover all aspects of your business. A rough guide on what headings to base your plan on are:
Executive summary and elevator pitch
Products and services
The market: market research, marketing strategy, competitor analysis
Operations and logistics
Cost and pricing strategy
- Change the perspective
Ultimately, a business plan is something that can be used to attract investment and funding. For this reason, it should be written from the readers perspective. This can be adjusted depending on who the reader is at the time; for example, if you’re pitching the business to an investor the plan can be more focused on the financial aspect of the strategy, whereas a discussing the business plan with a marketing company would require tweaking the plan to highlight PR perspectives.
- Know the market and competition
Before pitching the business plan to potential investors, you will need to have extensively researched your market. This is done by conducting market research and producing the results in the plan. Market research will cover market size, the demand, competition and more and how you, as a business, will access your target market. Knowing your competition is an important step in any start-up business; understanding and analysing competition both locally and on a general basis is a crucial part of your business plan. To begin with, look at whether the industry is particularly competitive, and if so, where you can shine and set your business apart to tackle the competition. If there is competition, how can you be the industry leader? By documenting how you plan to participate within your field you will strategize your method of becoming a leading company.
- Do the sums
The financial forecasts and numbers featured in your business plan will be particularly scrutinised by investors. Your cost and pricing strategy should include accurate information on the charge for your product / service. You can then compare this to your competitors to see if you’re still able to attract customers when your service is more expensive, perhaps by distinguishing it in some way.
The sales / costs forecast should be presented in a table (i.e. an excel spreadsheet), showing the monthly sales that you plan to achieve. When documenting your financial forecast, it is advisable to plan for a worst-case scenario, as it’s never possible to know what a realistic number of sales will be. Consider how sales could be affected by external factors such as holiday periods and seasons, and detail whether you expect your sales to be different in some months.
As well as a financial forecast, a cashflow forecast is required to show how much money you expect to come in and go out of your business. This ties in all the work completed in your plan and therefore must be completed realistically. This considers aspects such as increased heating and lighting bills for the winter months, etc.
- Back-up plan
Sometimes, despite extensive planning, a business will fail. This could be due to many factors, including a lack of cash, new competitor, change to your personal life, etc. It is essential to include a back-up strategy towards the end of your business plan to show investors that you’re prepared to tackle the unexpected with further goals and objectives. This can include a plan to work with a cheaper supplier, shorten payment receipts from customers, boosting sales with effective networking and marketing and so on. If the worst was to happen and the business were to fail, consider changes you can make as a business owner, such as taking training courses in struggling areas or working part time on the side to help fund the business, as well as using this section to reflect on what you have learnt so far as a result.
There is no point in having a business plan if you don’t use it, so try to implement it into your day to day business life when starting out, and referring to it monthly when you have been trading for a few weeks to see if you’re on track. The plan isn’t final and can always be changed, and should be reviewed when changes occur and figures crystallise and on reaching significant milestones.
For further assistance on anything business related, or if you would like support or advice on writing your business plan, contact us today for free, confidential business advice with an experienced business adviser. 020 8371 3280 / firstname.lastname@example.org