Every business owner agrees:
A business plan is a daunting task, but it is very helpful to ensure you’re clear about the purpose of your business.
As with most parts of running a business, having a specific goal to shoot for when you’re writing your business plan is crucial.
When to begin writing it though?
We think that when you are in the final process of buying an established business is a great time to start.
This way you know exactly what the business will be doing over the next few months and you can prepare beforehand.
It may sound difficult and time consuming, but having a plan at the ready can provide some fantastic benefits:
- It can provide a blueprint for running your business
- It can act as a checklist for your progress
- It is vital for convincing your bank and lenders that you've thought about all aspects of the venture
- It can help build your business by attracting more investors and high quality staff; it can even help key customers and suppliers to support you.
To assist you in setting up your business plan, we've created a step-by-step guide on the 13 most important things to include that will elevate your business plan from good to great.
Let's get started.
1. Business information
In this section you need to explain the background of the established business.
This allows anybody, including yourself, to get a neat summary of the business at a glance should the need arise and it forms the foundation for the rest of the plan.
Questions to answer in this section are:
- What sector and industry is it in?
- What are the trends in the relevant market?
- How long has the business been running?
- What are the strengths and weaknesses, opportunities and threats?
- What are the Unique Selling Points?
- What does the future hold for this business?
2. Development plans
When you buy a business, you're (theoretically, of course) in it for the long haul
Discuss how the business can be developed in the comings months and years.
What we mean by this is the following:
- Are there opportunities for extending the property?
- Are there opportunities for renovation?
- Is there a prospect of creating new products or services down the line?
Answering these questions sets yourself up for expanding the horizons of the business since it forces you to think about what could be rather than what currently is.
3. Location and the property
This is a huge factor for walk-in trade or destination trade so ensure you describe where the business is and how it can affect trade.
You should absolutely include the following in this part of the plan:
- The advantages of the location, e.g. if there is access to parking or further development.
- Any agreements in place, if there are any restrictions and describe the buildings and fabrics.
- The costs of any refurbishments.
- How the business can expand or add value.
4. The market
In this part of the plan, you want to highlight one of the most important parts of your business:
The market you're catering to.
Getting a clear picture of the target audience means that you've got a reference point for future decisions to see if these decision serve the customers you have in mind.
Be sure to include the following:
- The types of customers you plan to target.
- Who’ll use your service and why.
- The benefits you can give to customers.
- The different segments of the markets and whether they are growing or declining.
- Illustrate the trends and outline the key characteristics of the buyers using demographics.
Every business has competition in one form or another.
This part of the plan exists to map out what you can about your competitors and see what you can learn from their success stories and their blunders.
Put your sleuthing cap on and get to work on the following points:
- A list of all your main competitors including their market and location.
- Their strengths and weaknesses.
- Where your foremost competition will come from.
- How your product or service is better than theirs.
It's good to be as honest as you can be when it comes to determining their strength and weaknesses since a clear view of the competition can bring some amazing insights you would have normally glossed right over.
6. Sales and marketing
It doesn't matter how amazing your business is if nobody hears about it.
Marketing is a vital part of any healthy business, and thinking about the marketing activities you'll put into play can make or break your new business.
Be sure to think extensively about the following points:
- How your business will advertise and promote the products or services.
- Choose which marketing communication tool you will use to reach the previously determined target audience
It might not be the most daunting list of items, but don't be fooled:
Plotting this out will take time.
You've got to think about public relations, direct mail, e-mail marketing, advertising, sales promotion and the use of social media for the different segments of your audience.
Will you have an internal marketing machine churning out great material for you?
Or is it more beneficial to approach an external agency to handle these matters?
7. Management team
A business is only as successful as the people running it.
It's essential that management is on the same page when it comes to the daily operations of your business.
This section should include:
- How the business is run.
- The different management roles.
- The use of specialist staff.
- Your opening hours.
- How much time you will be putting into the business personally.
8. Staff and resources
When it comes to assessing how many staff you’ll need and to calculate your staffing costs, there are questions to ask:
- Who are the most important staff, managers and advisers?
- Who are the people that already work in the business and what are their roles, skills, qualifications, background and experience?
- What are the costs of restructuring staff (new employment terms and unfair dismissal)?
- What are the management information systems and procedures?
Management accounts, sales, stock control and quality control also need to be taken into account.
This might be a tough part to include since it forces you to face the difficulties ahead.
Trust us when we say that in the long run you'll be very glad you've taken a long and critical (this is important!) look at the pitfalls for your business.
Answer the following questions:
- What could go wrong and why?
- What insurance and indemnity will you need to cover the business?
- What are the major liabilities of the business e.g. loans, wages and rent?
Again, like when you were mapping out your competitors, it pays to be honest since you don't want to sugarcoat any potential threats to your business and have them catch you unaware.
Your business will likely be dependent on other services and suppliers to operate. There are very few businesses self-sufficient to the point where they can operate entirely independently.
This part of the business plan exists to plot out the following elements:
- If the business needs any additional resources.
- Any potential limits to production capacity.
- The suppliers for your business.
- How your suppliers collect money.
- If your product or service based on capital, materials or labour.
11. Financial information, cash flow and balance sheet
Speaking of resources:
Finances and cash flow are without a doubt the most important resources when it comes to measuring the success and health of a business.
Getting a bird's eye view of your earnings and expenses is extremely important for that reason.
Answer the following questions in this part of the business plan:
- How much money is needed?
- What are the projected profits and costs?
- How much money is owed?
The financial information is very important for the business plan.
For more information read our financing the purchase of a small business guide.
Things to focus on in this section are:
- Realistic financial forecast
- Profit and Loss forecast
- Projected balance sheets
- Financial requirements
12. Supporting your claims
Though this is the part of the business plan that comes last, you're not done yet after this part.
Make sure to read step 13 after this!
A business plan is not complete without some evidence supporting the statements you've made throughout.
It is important to use any materials that can support your claims, and give any other relevant information like:
- Location maps
- Pictures of your established business
- CVs and references of key personnel
- Market research data
- Demographic information
- Architect’s plans
- Target customers
- Potential marketing strategy
- Licensing and registration requirements
The more evidence you give, the better the business plan will be.
Presenting it in a simple and informative way will help the reader, as they may not have time to read through all the details.
It is crucial to keep your business plan short and simple, and focus on what the reader needs to know.
With this in mind, you can really improve the quality of your business plan quite significantly.
13. Executive summary
Even though this is the first page of the business plan, it is the last section to be written.
It should outline all the key elements of the business plan and discuss the following:
- The advantages of your product or service
- Your market opportunity
- Management team
- Financial projections
- Any funding requirements
Collecting this information should be a piece of cake now that you've already written the rest of the plan!
And you're all done!
Now that you're done with the 13 parts of your business plan, you should have a crystal clear image of the business that you can present to others.
But a business plan is only the beginning, so get out there and make your new business successful!
If you're looking for some more information on running a business in guides similar to this one, visit our Knowledge Hub.
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