A business plan provides an outline of your business, including what your business will do and the market for your products and services, how it will operate, the costs involved, and – importantly – how it will make money. A good business plan will clearly illustrate its unique selling points (USPs), and why your business will succeed when not all businesses do.
The main reason that new businesses fail is poor planning. A great idea alone will not guarantee success. Not only does a good business plan act as a form of a checklist, giving you the confidence that you’ve thought through everything you need to in order to make your business a success, but it also inspires confidence in those who you ask for financial or other support, whether that’s a bank, partners or investors.
What can you get from a business plan?
A business plan is for the life (of your business), not just for its christening. While it can be an invaluable tool to get your new business off the ground in the first place, referring back to it along the way can keep you on track, and make sure you are not deviating from the plan without good reason.
A business plan can help you:
- Clarify your strategy
- Work out what will make your business stand out from competitors
- Identify and troubleshoot potential problems
- Set and manage milestones
- Measure progress
- Manage money using projections for sales, costs, expenses, and cash
- Set contingency plans for worst-case scenarios
- Secure financing for your business.
How long will it take to complete a business plan?
From start to finish, a business plan is likely to take a few weeks to do properly, though some parts will be quicker than others. This doesn’t mean spending every waking hour writing it over the course of those weeks, but as well as getting down words on paper, you’ll need to allow time to, for example:
- Carry out competitor research, and speak to members of your target audience
- Get input from external stakeholders, such as potential suppliers or business partners
- Investigate marketing options
- Self-edit and proofread the plan, ideally coming back to it with a fresh pair of eyes at least a day or two after your first draft
Tip #1 Cut the waffle
Be concise and to the point – write as little as you can to get across what you need to, and use plain English. Potential backers are likely to be time-poor and will want to see at a glance what your business is about. Include a summary of your business, and how it will make money right from the start. If necessary, detailed information can go in an appendix.
Tip #2 Be realistic
Recognise and address weaknesses and threats rather than brushing them under the carpet, and don’t over-inflate potential profits; banks and investors will see straight through overly optimistic projections.
Tip #3 Do your customer and competitor research
Make sure your plan is clear about your target market. Speak to potential customers and research other companies that are offering similar products or services. Be able to demonstrate why your target market will want/need your products and services and why they should choose your business over competitors.
Tip #4 Don’t gloss over the finances
Ultimately, the success of a business boils down to whether it makes money. Crunch the numbers carefully, taking into account expenses as well as potential sales over time, and allow contingency for things not going as planned. Be very clear on how you will make a profit.
Tip #5 Get someone you trust to check your business plan
An impartial pair of eyes – ideally belonging to someone who won’t be directly or indirectly involved in the business – will help spot any issues, such as inconsistencies, information gaps, confusing language, or even the odd typo that could make your plan appear less professional.