As an entrepreneur starting a business, or even planning a scale-up, a business plan is a very important part of the process. This strategic tool helps define your short and long-term goals while providing a blueprint for your next steps.
Most business plans are developed during the first stages of a start-up, but that’s not to say that they aren’t important when you enter the growing phase of your business.
Your business plan is not a 'set it & forget it' document. As your venture develops and grows, revisiting your plan will be crucial to measuring your success and to continue supporting your journey during a new set of challenges.
What is a business plan?
A business plan is a document that defines the goals of your business and how they will be achieved. It is an essential resource that provides strategic direction for your business.
When putting your business plan together you should ensure that you address these 6 key areas:
- Your executive summary
- The vision statement and goal overview of your business
- Target audience and competitor research
- Your products and services
- Business structure and operations
- Your financial plan
#1 The Executive Summary
Your executive summary briefly outlines the main points of your business plan and provides a glimpse of what your company does and how it operates.
It should include your mission statement which is a short description (1-2 sentences) describing your company, its purpose, and its values.
Remembering to keep your executive summary clear and concise, think about:
- Why you’re in business
- What services and products you offer
- Who your customers are
- How you’re different from your competitors
- What role you and your team will have
- What your goals are and how you’ll reach them
- Key relationships and how they will be maintained
Don’t be afraid to brainstorm with others connected to your business. This could be individuals directly involved such as employees, investors, or business partners.
Another option is discussing your executive summary and mission statement with those who play an external support role in your business such as your advisor or accountant.
Not only will they have knowledge of your venture, but they also have strategic planning experience. This will help reveal the strengths and weaknesses in your statement, as well as identify things you may have missed.
#2 Vision Statement and Goal Overview
You should have a section of your business plan dedicated to the future aspirations of your business. Your vision statement will articulate what you want to achieve and in turn provide a common direction for the entire team.
It’s important to keep your goals S.M.A.R.T (specific, measurable, attainable, relevant, time-based).
Five questions to ask about your goals:
- Are they clear and specific?
- How will the goals be evaluated?
- Is the goal 100% achievable?
- How will the goal improve the business?
- Do your goals have due dates?
#3 Target Audience and Competitor Research
In order to sell your product or service, you need to define your target audience. A target audience is a group of people you have identified as potential customers.
To help determine your target audience you will generally look at demographic traits such as:
- Location
- Age
- Education
- Gender
- Income
You’ll then look at your product or service and the specific problem it solves. This, combined with the demographic data will help you fine tune the details surrounding your defined audience.
Defining your target audience will help you plan and execute your marketing strategy in the most efficient and effective way.
Once you've identified who you're selling to, research your market and identify your competitors. Evaluate how they promote their product or service as this will give you a better understanding of the overall market, allow you to identify any gaps, and help you develop or improve your business's strategy.
SWOT Analysis
As an additional project, it would be a good idea to perform and SWOT analysis and include this in your business plan. This detailed list of your strengths, weaknesses, opportunities and threats will give you further perspective of both your business and your competitors.
#4 Products and Services
This section of your business plan will describe what your business offers to its consumers.
Although descriptions of each product or service is needed, don’t over complicate it. Keep wording easy to understand and ensure you’re including how your product or service differs from the competition.
If you own or have applied for any of the following, you should also include these in this section:
- Copyrights
- Trademarks
- Patents
#5 Business Structure and Operations
The business structure you choose will have significant implications on the tax you pay and your liability.
There are four main types of business structures in the UK:
- Sole Trader - business is run and owned by one individual
- Partnership - business is owned and managed by two or more parties
- Limited Liability Partnership - business structure where liabilities are limited to the amount each individual has invested in the business
- Limited Company - business is separate from the individual and run as its own legal entity
Operations include the physical necessities required to run your business, businesses typically engage in these activities on a daily basis and they are essential to providing the highest quality product or service.
Four key areas of business operations you should address:
- Process - systems and procedures you will have in place
- Location - where you will do business (bricks and mortar/online)
- Team - who will be doing the work
- Equipment - the tools you will use
#6 Financial plan
A financial plan is not just where all the numbers come in, it’s the moment where you start turning your ideas into a reality.
In your financial plan, you’ll want to consider:
- Start-up or expansion costs
- Various business expenses
- Funding requirements
- Financial projections
A good plan of action would be to sit down and create a list that outlines what costs will be associated with your business.
For those revisiting their business plan and making adjustments during a phase of growth, these may be familiar things like lease fees, but at a higher amount. It could also be completely new costs or funding needs that are required to expand the business.
If you’re in the start-up stage, you will have to build your list from scratch as you won’t have the same historical financial information as an established business.
This is a list of some of the common businesses expenses to help you get started:
- Marketing, sales and advertising costs
- Office supplies
- Lease payments
- Insurance
- Licenses and permits
- Staff and employment
- Equipment
- Stock
- Professional fees
- IT costs
The importance of the expert second opinion
Whether you’re in the start-up or growth stage, a business plan will play an important role in the success of your venture.
Bringing an expert on board will help build a solid foundation and uncover challenges you may face moving forward.
Working with your accountant will:
- Provide a second opinion backed by experience
- Offer constructive feedback on the key areas of your business plan
- Give you advice on the legal structure of your business and the financial implications of each
- Help make important decisions and offer other beneficial elements you may want to consider
Working with DSA Prospect
The DSA team have worked with clients across all industries, helping them get their business off the ground and prepare for the challenges ahead.
We have a wealth of knowledge that can help you develop a business plan that will guide you through your business journey, as well as a dedicated team here to support your individual needs and vision.
Updates:
Title: How to write a business plan: 6 key components to a good plan
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