Why do I need to write a business plan?
Your business plan is one of your venture’s most important documents. It’s the bible you’ll use to help establish your company, but it’s also the guiding document against which you’ll measure your success and continue to grow.
In order to build your business sustainably, you need to know where you are and where you’re going. This is what a business plan provides.
There’s a range of formats in which you might choose to write a business plan, but most of them include the same core sections. Below, we’ve explained each of these areas and how to complete them.
Writing a business plan step by step
Ready to start writing your business plan? Here’s our step-by-step guide.
1. Executive summary. This is the outline of your plan, and a snappy explanation of your business. It’s used to pique the reader’s interest, and to explain what’s in the rest of the document. The executive summary shouldn’t generally be more than a couple of pages, and most people choose to write this section last.
2. The problem. This is where you explain the need for your business. What’s the problem you’re solving, or what’s the opportunity? Why do people need or want what you’re selling?
3. The solution. Here, you explain how you’re solving the problem you outlined in the previous section. What is it that your business will do? How does it meet the needs you’ve identified?
4. The market. In this section you explain the size and nature of your market. You’ll need to do some research to back this up, and that might be either quantitative, qualitative, or ideally both. Potential investors will want to know how big the market is, how many existing competitors there are, and whether the market is set to grow or contract.
5. Competitor analysis. Here, you’ll look at a few of your key competitors and analyse their strengths and weaknesses. What are they doing well, and what can you improve on?
6. SWOT analysis. This is a key part of the business plan. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This section helps you understand some of the most important factors that might affect the success of your proposition, and how you’re going to compete effectively with other companies operating in your market. Read more about how to create a SWOT analysis.
7. The execution. Now that you’ve done the analysis, this section allows you to explain how you’re actually going to run your business. How will you turn the opportunity into a profit-making enterprise? This section will have a number of subsections, including marketing and sales, operations, and benchmarks.
8. The team. Here you’ll explain who’s involved in the business and what their strengths are. You should outline each key team member’s experience, and what they bring to this new business. You might also want to include outside advisors and experts, such as your accountants.
9. Financials. Your business plan won’t succeed without watertight financial forecasts. Here, you’ll need to outline your sales forecasts and the cost of goods sold. You’ll also need a profit and loss forecast, cash flow statement, and balance sheet, each of which should be presented in raw figures and as charts. If you’re seeking equity investment, you should also think about including details of potential exit strategies.
10. Appendices. Finally, many business plans include appendix sections featuring other graphs, tables, or notes that are too long or involved to include in the body of the plan itself.
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