Tips for creating a business plan

Anyone who has never written a commercial plan before is likely to feel a little daunted at the prospect, especially if the aim is to attract investment finance. However, there is less to the process than you might think. Your business plan should include some key elements that demonstrate the potential viability of your enterprise. By conforming to the easily learned conventions of business plan writing, you will be able to produce a document that is readily understood by anyone who reads it.

Why do businesses create plans?

Business plans are written for two main reasons. The first is to help with strategic decision-making. By committing a plan to a fully-fledged written document, owners and directors of all sorts of enterprises can focus on their target markets with greater clarity. It also helps to establish any threats or weaknesses an organisation faces as well as the opportunities for success it has. By referring to it, commercial decision makers can stay truer to their original business goals. It is all too easy to make the wrong choices in the heat of the moment. Writing a business plan is a tried-and-tested way of establishing priorities so that you don’t end up heading down cul-de-sacs in pursuit of short-term gains.

The second reason that business plans are written is to attract funding. They can be shown to grant-awarding bodies, for example, to explain why a financial allocation might be made. They are also often needed to secure business loans or to attract potential investors. Without one, such financing options are not likely to be open to you.

Of course, you don’t need to write a new plan every year. That said, new businesses often benefit from going through the process annually as market conditions change. The same can be said of established enterprises which are going through some form of systemic restructuring or which are looking to move into new areas of commerce.

A business plan writer’s checklist

Not all plans need to be the same but they should include most of these elements if they are to be successful:

• An executive summary – a short sketch of your business proposals.
• A business overview – a description of your day-to-day operations, business structure and business model.
• A financial plan – essential reading for any investors, this section should include potential sources of funding, a balance sheet and your current cash flow projections.
• SWOT analysis – a template for a strategic breakdown of your business which helps you to focus on commercial objectives.
• A marketing plan – the means by which you intend to reach potential customers and retain existing ones.
• An operational strategy – a description of your processes and how you intend to streamline them.
• A management team summary – a description of the key employees in your business and their roles.
• Sectorial analysis – an overview of competitors, their marketing activities and of any start-ups in your sector which may pose a threat.
• A mission statement – something that business owners tend to like to include, but which is not essential reading from an investor’s point of view.

Remember that you should include most of these elements but you can leave out some which are not relevant to the reader. Your short-term financial position will only be of interest to your bank manager or a would-be investor, for example. Whether you include it at the start or the end, the executive summary you write will be expected and should be included in any business plan template. On the other hand, you might choose to leave out marketing details if you think your plan might be seen by a competitor. Always adapt your business plan depending on who will read it. A good business plan always seems like it has been tailored for its audience.

What common mistakes are made with business plans?

Some sample business plans you might use as a template for your own place too much emphasis on things like financial forecasts. You can include them but only in a summary. Likewise, a cash flow statement should only be included if it is relevant to the reader. Operational cash flow details are unlikely to be of interest to an investor in start-ups which often struggle with finances in their early days.

What will be of more interest is your potential, that which marks your business out from competitors, and your strategy for success. Most investors want to see sound business objectives laid out clearly in a plan rather than outlandish financial projections. Anyone can overestimate how successful their business will become in their planning. You’ll be much better placed by avoiding this trap and focussing on market segment analysis and a sober interpretation of any competitive advantages you may have.

Another common problem with business plans is when they use flowery marketing language. This is something to avoid because a good business plan will speak much more directly and be businesslike in a to-the-point fashion. This is particularly the case in your executive summary which should be exactly that – a summary. Remember to avoid sticking too closely to any template you might be using, however. No matter how concise your plan is, it must always convey your organisation’s individuality and make you stand out from competitors for potential funding streams.

What is a business continuity plan for?

Unlike a commercial business plan, which tends to focus on sales and marketing, a business continuity plan is there to refer to if something happens which threatens normal operations. A sound business continuity plan will, for instance, inform employees of what to do if the main office needs to be shut for a period of time. Any commercial organisation can be harmed by the outbreak of a fire at their premises, for example. Contingency planning should indicate what to do in such circumstances.

However, continuity planning is not all about dealing with the aftermath of potentially disastrous situations. Your plan should also include procedures to follow if there is a data breach or if there is a temporary outbreak of sickness among employees which stops them coming into work. Ask yourself what you can do to keep the business running if your electronic files are not available or what other sources of labour you can call on.

Another important aspect of continuity planning for smaller businesses is what to do if there is a problem which prevents the owner from working. Many small enterprises cannot pay wages, settle invoices or make daily decisions if the owner is not in the office. That might be okay if you go on holiday for a week or two but what about a longer spell? Business continuity planning should take account of the conditions whereby the owner is incapacitated in some way and provide a means for the company to carry on until he or she can return.

Tips for writing a business plan in 30 minutes

You may need to put a business plan together at short notice, perhaps for your bank manager to read. If so, then keep it simple. Follow these tips:

• Don’t include market research unless you have it to hand already. Making up data is simply not worth it. Use your own knowledge of the market you operate in instead.
• A couple of sentences about your management team is sufficient. You don’t need to include the details you would on a CV, for example. If your management is run by just one person, then this should be stated straightforwardly in a single sentence.
• Give a step-by-step breakdown of how you will sell services and products to customers and the marketing strategy you have to reach them. This is more important to potential investors than nearly everything else.
• Don’t cram too much on one page. Several clearly laid-out pages are better than one or two which are stuffed full of text.
• You don’t need to use a business plan template to write a good plan. A simple word processor is all that is required for the essential elements with no fancy graphics to convey your key strategies.
• If you are operating at a loss for the time being, then make it clear when you expect to become profitable. This is known as your break-even point and is essential reading for all stakeholders.
• Explain which target markets you might focus on to achieve growth. This might include new sectors, untapped clients in your current sector, new areas of the country to operate in and alternative sales channels.
• Don’t spend ages detailing all of your marketing plan. If you have limited time, just bullet point the salient facts and spend the final few minutes you have available proofreading so that any errors are eliminated from the final version.