When you start a business, there are a million things you need to do. Trust us, we’ve counted them.
So researching and writing a business plan can feel like a ‘maybe next week’ activity that never reaches the top of your to do list.
However, businesses who write a business plan are more likely to succeed.
So even though it’s tempting to focus on quicker wins, writing a business plan really should be one of your top priorities.
STEP 1 : Understand why you need a business plan
The first step to writing a business plan is to understand the basics. What is a business plan? Why write a business plan? What does a business plan include?
What is a business plan?
A business plan is a document that describes a new business. It includes important information about your business and its structure, what you plan to achieve, and how you plan to do it.
Written by an aspiring entrepreneur at the beginning of their business journey, it provides a roadmap of what they hope to achieve.
You don’t have to have a business degree or a multi-million-pound idea to write a business plan. Anyone starting a business should take the time to commit their vision to paper.
Wondering if you’ve got what it takes to start a business? Check out the 12 essential attributes of an entrepreneur.
We also have a full guide on How To Start Your Own Business.
Three reasons to write a business plan
(1) Focus your mind (2) Test your ideas (3) Attract funding. It might take a lot of thinking about… but it’s a total no-brainer that you need one.
Why write a business plan?
A business plan sets out your vision and strategy for your business. It helps you and other people to understand what you hope to achieve. It is essential if you want to secure funding for your business, as lenders will want to understand your plans for your business. Here are the main reasons for writing a business plan.
A business plan helps focus your mind: If you want to succeed, you need to take your new business seriously. Having a business plan is your first step to manifesting your dreams as reality. It turns a cloud of great ideas into a firm plan about how you’ll achieve them. It can actually be a relief to get things out of your head and onto paper. And it provides a structure for your first year in business, giving you clear steps to take towards your future success.
A business plan makes you more realistic: Self-confidence is brilliant but it doesn’t pay the bills. You’ll need more than blind faith to create a firm financial foundation for your new venture. A business plan helps you understand what you can afford to do and how much you can realistically expect to make. By helping you prioritise limited resources, it makes you far more likely to succeed.
A business plan helps secure funding: Whether you’re planning to find an investor or take out a business loan, you’ll need a plan to demonstrate that your business is financially viable. Lenders and investors will want to see that you’ve thought through the full implications of your business and are ready to take your financial responsibilities seriously. Check out our Guide to Funding a New Business.
What does a business plan include?
Don’t worry. There’s no set formula for writing a business plan. We recommend you follow a business plan template because it can make it easier to write your plan. But your business won’t suffer if you don’t follow a certain template.
However, there are key elements that they always include:
- details about your business / business idea
- your target market and how you’ll reach them
- your goals and how you plan to achieve them
- details about your finances
How long should a business plan be?
That depends on who’s going to read it. There are two main audiences for a business plan: you and potential funders.
- Just you – to help plan your journey and set objectives – 10-12 pages
- For funders – to help explain your vision and inspire their support – 20 to 30 pages
STEP 2 : Preparing to write your business plan
Writing your business plan starts long before you start typing. Just sitting down and getting started won’t work. You need to be in the right mind set (enthused, inspired… probably caffeinated) and you need to have done your research in advance.
Top tips for writing your business plan
Don’t be intimidated, keep things simple, and let your passion shine through.
Don’t be intimidated: Unless you’ve studied business or started a business before, you’re not likely to have a strong grasp on everything you need to include. Don’t let that put you off. We’ve supported 6,000 people to start their own business. We know that business owners are just normal people doing their best. Life isn’t like The Apprentice or Dragon’s Den, so don’t let that perception put you off. You’ve got this!
KISS: Keep It Simple, Stupid! Don’t try to impress readers with long words or baffling business speak. Use professional language but keep writing clear and simple. This will make your business plan easier to write, easier to follow and easier for other people to understand. Investors and funders may not be experts in your business area, so make it easy to grasp.
Share your passion: You know your business better than anyone. You know why you want to do it and what benefits you’ll bring to your adoring audience. Share your enthusiasm and vision with the reader. If you want to change the world, tell them. Investors are buying into your business but they’re buying into you too, so don’t be afraid to show them who you are.
Doing research for your business plan
The magic ingredient in any successful business plan is research. So get your thinking cap on because you’ll need to uncover information that shows your business has potential. Here are some things you’ll need to think about. Click on the links for more detailed information about each one.
- SWOT / PEST – looking at yourself, your business and the external environment to identify factors that could affect your success. Forewarned is forearmed!
- Market research – research that explores the size of the market, what people think about your product, how much they’re willing to pay etc
- Competitor research – who you’ll be competing against, what they’re good at, where you have a competitive advantage
- Budget and financial forecast – what you’ll need to spend and what you predict you can earn. It is really important to create a realistic financial forecast. Most people tend to be overoptimistic and that can cause problems down the line if reality doesn’t match your expectations.
Our article on market research for startups goes into lots of detail to get you up to speed with all things research-related.