If you’re in the process of making your entrepreneurial brainwave a reality, you will likely have already been told countless times how important a great business plan is. For good reason, too. While a business plan isn’t a legal necessity, it is still a must-have for any business, new or established.
We’re rather a fan of helping businesses (literally our day job), so we’ll get you up to speed on what a business plan is, why they’re so important, and what you should include in yours.
What is a business plan?
A business plan is basically an opportunity to get your bright idea down on paper (*or the digital equivalent) and explain what steps you’ll take to make things happen.
It takes things beyond the ‘dream big’ stage, and lays out the specifics of what you’re trying to achieve, how you plan to achieve these goals, and planned timeframes.
Some business owners create multiple versions of their business plan, such as one version which is specifically geared towards an angel investor, for instance. That said, this isn’t necessary and not all business owners do this.
Reasons why you need a business plan
A business plan is an essential step if you’re going to set your new venture up for continued success. It’s a vital tool that will help you (and your team or business partners) to steer the business in the right direction towards your goals and objectives.
Your business plan isn’t just there for internal use though, it’s also an essential document when it comes to liaising with people and organisations outside of the business – such as investors and lenders, or potential partners.
Identify issues and deal with them sooner
Theories often turn out to be quite different from reality, which is what most aspiring entrepreneurs find when they do start putting pen to paper.
Once you actually start to think about timelines, financial requirements and projections, marketing strategy, and logistics, then you might well discover some potential hurdles to overcome.
Putting a business plan together is an effective way to identify what’s feasible before you’re actually up against the problem, helping you to be more efficient in terms of time, money, and expectation (and hopefully making it less scary).
A strategic plan of action everybody can follow
Your business plan is the universal rule book for everyone in the business to follow – even if it’s just you! It’s so easy to get distracted, so a step-by-step guide to your business’s aims and the route to achieving them will help everyone involved.
The document should leave no stone unturned in terms of objectives, goals, and desired timeframes. People can refer back to this whenever they need refreshing or realigning.
Your business plan is something that provides a focal point to grow and evolve with, no matter how many times it is iterated on along the way.
Accessing funding and investment
Last but by no means least, a business plan is absolutely crucial in a pitch for investment, funding, loans, or any other type of capital coming into your venture. This is true for established businesses scaling up as well as those in the early startup stages.
Anybody investing anything into your business will want to know what they can expect to get in return, when to expect this to happen, and how the business plans to do it. Your business plan is where you outline this information to answer all of those questions.
Any investor will want to look closely at your financial forecasting and your strategic plan to ascertain whether or not they feel it’s a good opportunity for them.
How to write a business plan
Before writing your plan, create a list of items you know you want to include (today’s top tip from the copywriter!). You can use it as a skeleton to build on, such as:
- A description of your business structure and model, why you chose it, and who else is involved in the business
- An explanation of what the business is setting out to achieve
- Trademark or patent information
- Up-to-date market analysis, with reference to your target market and competitors
- Outline of your marketing plan
- Financial reports explaining your costs, projected income, and cash flow forecasting
- The logistics of how you will make sales to customers and provide them with their purchases (for instance, an ecommerce business could have its own website, or rely on sales platforms such as Etsy)
Make sure you’ve got these boxes ticked so you can be sure all bases are covered. After that, you can include anything else you think will bolster the function and purpose of your business plan.
If you’re being vague, explain why
You might have confidential details or sensitive information that you aren’t able or willing to share in your business plan, especially in the early stages.
If this is the case, it’s important to point this out and justify any vagueness. If you don’t, you run the risk of it being mistaken for a lack of substance or oversight.
If an investor says that access to confidential information is a deal-breaker and you’re willing to make them privy, you can always ask them to sign a Non-Disclosure Agreement (NDA). This will legally bind them against sharing your sensitive information anywhere.
Have your business plan checked over
Once you think you’re done with your business plan, the next thing you need to do is run it past a few people to check everything makes sense, and that there are no mistakes or missing information. They might be:
- A friend or family member: Ask for an honest opinion from a non-business perspective, which can help ensure good readability and comprehension
- An accountant: They will play a pivotal part in making sure all of the financial figures and metrics add up – literally
- Someone to proofread it: To weed out any typos, grammatical errors or formatting faux pas. No room for this in your budget? Check out free online tools like Grammarly
As well as a great business plan, you need great bookkeeping to help your business get off the ground and grow. Sign up for your free Pandle account today.
