Your business plan acts as a road map for your start-up’s future growth. It helps you to clarify your objectives, identify strategic directions, and set targets. It can also assist you with growing your business and securing funding.
Before you start working on your business plan, refine your goals.
Although there’s no set formula for writing a business plan, most business plans cover three broad areas:
Outline your target market, your customers and the other businesses you’ll compete against in that market.
Define the market in which you plan to sell and then focus on the segments of the market in which you compete. How large is each market segment? What’s your market share?
Describe the nature and distribution of your existing customers. Give a typical customer profile for each market segment you target. For example, you might target businesses with a turnover of more than £2 million.
Define your principal competition. What are the advantages and disadvantages of their products and services compared with yours? Cover issues such as price, quality and distribution. Then explain your competitive advantage.
Summarize your proposed marketing and sales activities, such as positioning, pricing and promotion.
Explain how you’ll position your products or services in the market place. For example, are they:
What unique selling features do your products or services have and which of these features will you concentrate on?
Explain how price sensitive your products or services are. Look at each product or market segment in turn. Identify where you make your profits and where there is scope to increase margins or sales.
How do you promote your products or services? Do you use direct marketing, advertising or online marketing?
What channels do you plan to use to reach your potential customers? Compare your planned channels with your competitors. Outline any ideas you have to improve your distribution.
Analyse the cost efficiency of each of your selling methods, such as telesales, a direct sales force, agents, or the Internet. If you have a direct sales force, include all the hidden costs like management time.
Analyse the capacity and efficiency of your operations and your planned improvements. For instance:
Set out the structure and key skills of your management team and staff. Identify any skill shortages, such as IT skills, and your plans to cover these.
Set out the historical financial information on your business for the last three to five years (if applicable). Break the sales figures down. For example, show sales of different types of products or to different types of customers and highlight the gross margins.
Emphasise any major capital expenditure made in the period and provide both an up-to-date balance sheet and profit and loss account. Explain the reasons for movements in profitability, working capital and cash flow and compare them with industry norms.
Provide forecasts for your next three years in business. Use the same format as for the historical information, to aid comparisons.
Clearly state the assumptions behind your forecasts. For example, if your plan states that the market is becoming more competitive, profit margins will probably be falling.
Consider including a one-page analysis of strengths, weaknesses, opportunities and threats (SWOT) in your business plan. For example, your:
Include your future business plans and how you intend to drive your small business forward. Define clear targets and timelines for these so that you know exactly what you want to achieve, by when.
Review your plan at least once a year – revising and updating your plan will keep it relevant as a road map for your business.
This guide is intended as general advice only, and not intended to cover specific circumstances and needs. The information in this article is also not linked to any of the products offered by Yorkshire Bank.