A thorough business plan is a written document which outlines the core objectives and strategies of a new business, as well as the sales and marketing strategy and clearly defined financial forecasts to demonstrate a) knowledge of the industry itself and b) potential investment opportunities for lenders and investors.
Within this guide, we’ll cover everything you need to include within your first business plan, from defining the concept of the business through to marketing, sales and financial forecasts.
Start with an executive summary
Most lenders and investors will want an immediate indication of what your business is, what you plan to offer and why you think you’ll be able to make it a success. An executive summary forms the introduction to any business plan, giving you the chance to encapsulate the reason behind the business and its short and long-term objectives.
Within your executive summary and throughout the remainder of your first business plan, it’s important to consider that any potential investors may not be up to speed with any specific industry jargon relating to your business idea, so describing your business approach in plain English is always the preferred option.
Define your customers
It’s virtually impossible to run a successful business without knowing who you are trying to sell to. It’s equally difficult for lenders and private investors to consider stumping up significant sums of money to invest in your business idea without the context of your potential customer base.
A business plan should include answers to the following types of questions:
- How old are your customers likely to be?
- What professions are your customers likely to be involved in?
- Describe the lifestyle of a typical customer of your business
- Describe why a typical customer will opt to buy from you and not any of your competitors
- Outline how you intend to let your target demographic know about your business.
The business name
Your business plan will also be centred around your business name. It needs to accurately reflect the image you wish to project to your customers. It’s vital that you do your research and ensure the business name you desire is not already taken, both formally at Companies House and digitally in terms of web domains.
Another important aspect for those with aspirations to do business on an international scale is to check the meaning of your business name in alternative languages and destinations – it could save yourself considerable embarrassment in the long run!
Management and personnel
If you’re looking to prove your credentials and demonstrate to investors that you have the necessary expertise to take the business forward and achieve its full potential, you’ll need a section within your business plan which outlines your professional experience. If you plan to hire personnel, it is here where you should describe the calibre of employees you plan to recruit to work with you.
Note: Even if you are anticipating hiring staff on a part-time basis your business plan needs to articulate a clear understanding of UK employment law and know-how as to empowering and encouraging staff to succeed and aid the business. Discuss aspects such as training schemes and wage structures to set out a roadmap for when the time comes to grow the team.
Marketing and sales
Purely and simply, a clearly defined sales and marketing strategy within a business plan determines to investors and lenders how the business will ultimately generate sales and growth. After all, it’s all well and good designing and creating outstanding products and services, but your target demographic must be able to discover they exist in the first place!
There are a number of aspects to talk about within your sales and marketing proposal:
- How does the competition compare? If you’re attempting to enter a busy industry you need to ensure your marketing plan creates an immediate ‘buzz’ to set you apart from your nearest competitors. Can you outdo competitors on price, quality or service? Find a weakness in the competition and home in on it.
- Brand development – for any new business to market, customer perception is vital to getting early sales and start the ball rolling. At this stage, it’s good to determine what your unique selling points are and how these and the personality of the business is communicated through effective brand positioning.
- Customer benefits – can your business solve customer problems that your competitors cannot? If your business can deliver tangible benefits in terms of what a customer gets this needs to be communicated clearly within the marketing plan.
Your business operations
A comprehensive business plan should also discuss the day-to-day operations of the business. Typical topics to cover include:
- Business premises
- IT support
- Production facilities
- Business furniture
- Business software
- Internal fittings
If you’re an entrepreneur that’s looking for access to finance to help get your profitable business idea off the ground, you’ll need a clear and extensive financial forecast. This will help to set realistic aims for both yourself and investors and lenders alike.
If you’re looking for a sizeable investment, there’s no point in being dishonest and making outlandish financial forecasts that could result in irregularities that cause a delay to the lending process or, worse still, halt it altogether.
First things first, note down your initial business expenses, e.g. utility bills, staffing, insurance premiums, legal fees and advertising/marketing. Some businesses will also have variable business costs to consider, such as the price of the products or services you are selling.
Once you have a clear picture of both the fixed and variable costs, you are best placed to provide a revenue forecast. In an ideal world, you’ll see revenues begin to outstrip expenses more and more each year, resulting in wider profit margins that will be music to the ears of potential investors and lenders.
Presenting your business plan
Finished your business plan? Good work. The last thing you need to consider to guarantee your plan has maximum impact is how it is presented to potential investors and lenders.
Here are some quick tips to a highly-professional business plan delivery:
- Ensure it is a manageable length, both in terms of word count and verbal delivery for presentations.
- Content needs to be legible, with font type big enough to read on paper and screen.
- Avoid jargon and write in plain English. If you need to include market research data or balance sheets, make sure these are in an appendix at the rear of the document.
- Get your business plan proof-read by more than one person and seek to show your plan with a trusted accountant before any important appointments with lenders.