A key element of running a successful business is having a plan. Most business owners have a good idea of their short-, medium- and long-term goals – but all too often this strategy is a loose set of ideas in their heads, or jotted down in the form of to-do lists or notes.
Why do I need a business plan?
The benefits of having a formalised business plan cannot be underestimated. By taking the time to research your market and your proposition, you will uncover numerous insights that will help you drive growth. You can set yourself and others concrete goals and then measure success. It will help you evaluate your requirements in terms of human resources and will be a useful tool when recruiting talent for key roles. It’s also invaluable when seeking investment or other financing such as bank loans. Research has clearly shown that companies that commit their business plans to paper achieve better results than those that don’t.
What is a business plan?
A business plan consists of a projection and strategy for the next three years, and outlines the direction the company intends to take to create profits.
What should I include in a business plan?
There are seven key elements we include when writing a business plan, although depending on your business you may have more sections than this and structure it differently.
1) Executive summary
This is a snapshot of your business plan as a whole, including your goals and company profile. It is written after the title of the business. It should tell the reader what the business is about at a glance. Include a mission statement, financial information, company information, growth highlights and a summary of future plans.
2) Company description
A company description provides information on what you do, what differentiates your business from others, and the markets your business serves. Include a brief description of the industry you’re in. Discuss the present outlook of the business, as well as a vision for the future. You can also provide information on the various markets within the industry and list any prospective products that might impact your business – positively or negatively.
3) Market analysis
The purpose of market analysis is to understand the strengths and weaknesses of the competitors within your market. You can then propose strategies to differentiate your company and improve its value proposition. Outline your target market, its size, competitive analysis and how much market share you can gain.
4) Marketing & sales strategy
This section is crucial, as it lays out the marketing and sales strategy that will drive revenue and growth. Marketing is the process of creating customers, and customers are what every business is looking for to get profits. This part should contain a marketing strategy which consists of a market penetration strategy, a growth strategy, channel of distribution strategy and a communications strategy. In terms of sales, you should include your sales activities and a sales force plan.
5) Research & development
Expand upon your products and services – including features, benefits, and competitive advantages. If you are marketing a product, describe how and where your products will be produced. If you have any existing, pending, or anticipated copyright or patent filings, list them in this section.
6) Staffing and operations
This section should include your company’s organisational structure, details about the ownership of your company, profiles of your management team, and the qualifications of your board of directors. You can include the following information in the business plan regarding business owners:
- Names of the owners
- Percentage of ownership
- Extent of involvement with the company and their rights
- Forms of ownership (e.g. limited or general partners)
- Outstanding equity equivalents
- Management profiles
- Unique experience and skills
7) Financial projections
Finances are the lifeblood of a business. As a business owner, you need solid projections to help you asses the health of the business at any point. If you are going after funding, potential investors will want to see the expected return and sources of funding. If you have shareholders, they will be looking at the prospects for the share price and what dividend they can expect on their shares. It is a good idea to get someone experienced to look over your projections and plans to ensure they are realistic and that you haven’t left anything out. You should also be clear on what assumptions you are making and how much money you need to raise and where you intend to get it. As you can see, the process of writing a business plan will help you define your goals and map out a solid strategy for achieving them. There are some really good free templates available online to help you get started, such as these business plans from the Local Enterprise Office.