Our Guide To Starting Your Own Business: Part 3
How to write a business plan.
Are you daunted by the thought of writing a big, formal business plan? You’re not alone. A lot of people start and never finish, but you don’t have to be one of them. You can start with smaller tasks and work your way up.
What is a business plan anyway?
Think about your business plan as a road map. You know where you want to go, you just need to write down the directions to get there. The good news is it doesn’t have to be super detailed straight away. That’s because there are two types of business plan:
• the lean one-page plan, which is a great way to get going and build ideas
• the more formal long plan, which you’ll need if and when you’re looking for business funding
The content of each is broadly the same. You say who the target market is, why they need your product or service, how you’ll reach them, who you’re competing with and, of course, how much money you’ll make.
How to do a fast, one-page business plan.
The key to a one-page plan is to start out simple, and grow it as you go. You can begin with a few headings and some bullet points mapping out your vision, goals, milestones and financial forecasts.
Things will keep changing, and new information will come in, so think of it as a living document. Keep tweaking it as things evolve. Sections for a one-page business plan:
1. Value proposition
Make sure the reader understands the unique value you’ll provide in a few clear, simple sentences. Cut the jargon and fluff, and get to the point.
2. The problem you’re solving
Expand on the problem that you’re solving. Imagine that you’re talking to someone who’s never heard your idea before. What is it about your solution that hasn’t been done well before?
3. Target market and competition
Who are you selling to, and what other choices do they have? How are you going to serve them better?
This is where you need to show you’ve done some market research.
4. Sales and marketing
How will people learn about you? Will you use social media? Do your customers read trade publications? Or will you sell to them in person? Figure out where your target audience is, and go there.
5. Budget and sales
Do some forecasts of sales and outgoings. What will your margin be on each sale? Will it be enough? How many sales will you need to make a profit? Use the figures to define ‘success’.
Milestones will help you keep an eye on the big picture. For each milestone, say why it’s important, note what (or who) you need to make it happen,
and put a due date on it. This helps break everything you need to do down into manageable pieces.
7. The team
Who’s part of your business and why? Write a couple of lines for each person, including their goals and responsibilities. Do this even for roles you haven’t yet filled.
Identify how much you need (or already have) and what it’s for. When will repayments be made, and when do you expect to have paid it all back?
When writing a business plan that’s just one page, you need to keep things short and to the point. If there are lots of details for one of the sections, keep them on a separate document. Just run with a high-level summary in the one-page plan.
It’s often harder to write something short, so take a few passes. Whittle it down as you go. Make your language clear and simple. A 12-year-old should be able to understand it.
You can make a start by downloading our free one-page business plan template.
For some, one page is enough
Some people start a business with little more than
a one-page plan.
Rather than doing a whole heap of research, they launch their service or product quickly and watch the reaction of paying customers. After gathering that feedback, the business adjusts and improves their offering as fast as possible.
This lean startup methodology doesn’t suit all businesses. If you need finance from banks or investors, then you’ll probably need a more complete business plan.
‘If you’re passionate about starting a business, just dive in. Don’t overthink it. Have a strategy, but make sure it’s flexible enough to adapt and change. As the saying goes, “Plans are worthless, but planning is everything”.’
Don Grgic, Business Boost Centre Xero silver partner
Struggling to get started? Try a SWOT analysis
If you can’t get into a flow with your planning, try doing a SWOT analysis. It’s a great way to organise your thoughts and kickstart the planning process.
What is a SWOT analysis?
SWOT stands for strengths, weaknesses, opportunities and threats. It’s a way of thinking about your business from the inside out, and from the outside in.
• Strengths = things that are great about the idea
• Weaknesses = things about the idea that could be better
• Opportunities = things about the environment or market that will help the idea take off
• Threats = things about the environment or market that will work against you
A SWOT analysis gives you talking points for
your business plan, and concrete action points for getting launched.
How to do a SWOT analysis
To do a SWOT analysis, divide a page into quarters, then list your strengths, weaknesses, opportunities and threats in the four boxes.
Writing a longer business plan
Once you’ve done a lean one-pager, you’ll have a much better idea of how to write a detailed business plan. You’re really just expanding on what you already have.
Contents of a business plan (11 essential sections):
1. Executive summary
Provide a short summary of the main points of your business plan. Although it comes first, write it last.
2. Company overview
Identify your industry and your business model.
3. Products or services
Include the context for the problem your products or services solve. You could include your SWOT analysis here.
4. Market analysis
Identify your target market, and the competition including their strengths and weaknesses.
5. Risk assessment
What could go wrong, and how likely is it that those things will happen?
6. Marketing and sales plan
What’s your message, and how will you push it out? How many sales can you get?
What needs to happen and when? How will you measure success for each milestone?
8. Progress reporting
When and how will you report against these milestones? You don’t have to be overly formal. Just make sure you’re doing it.
Name the people involved, note their special skills, and assign responsibilities.
Take your sales forecasts and show how they play out financially.
Show how capital will be used to get set up and maintain operations initially. Show when debts will be repaid.
You can also add an appendix with any supporting or background documents.
Make a start by downloading our free business plan template.
Avoid these common business planning mistakes
• Underestimating how much money it will take to get started
• Not budgeting enough money to cover the first few months of operation
• Expecting sales to ramp up too fast
• Relying too heavily on one or two customers
• No contingencies for unexpected delays or costs
For more information, visit the gov.uk page on writing
a business plan, which comes complete with templates to help get you started.