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Writing a business plan is an essential part of establishing a new business. A comprehensive business plan can take your initial business idea and turn it into a fully functioning business.Ìý

However, when crafting a business plan, it’s not always easy to know where to start. This guide takes you through the 10 key steps to help you get your business plan right.ÌýÌý

Why writing a business plan is essential for business success

A business plan enables you to clarify your business idea and flesh out your strategy and action plan for the next few years. You can use it to set out your goals and how you plan to achieve them. Additionally, it gives you the chance to spot any problems that might affect your business so that you can get ahead of the curve and work out how to deal with them in advance.Ìý

Writing a business plan helps you to stay focused and measure your progress so that you know whether you’re still on track. But it can also be crucial when it comes to seeking finance.Ìý

• What is a business plan. and why does every entrepreneur need one?

• Key business plan sectionsÌý

How to write a business plan step by step

Follow the steps below to write your business plan and set your business up for success:Ìý

Step 1: Write your company description

This section provides a detailed overview of your company, explaining the problem your product or service solves and the market it serves. Use it to cover your business’s history, mission and vision, outlining why your business exists and what it plans to achieve.Ìý

You can also highlight your company’s strengths in this section, such as your skillset, as well as potential issues you might face and how you plan to overcome them.

Step 2: Outline the organisational structure and management

Describe your business’s legal structure, whether that’s sole trader, limited company, partnership or corporation. Also include your team and key personnel, potentially with an organisation chart to show the structure of your team and team members’ roles and responsibilities. Show how their skills and experience could help drive your business forward.Ìý

Step 3: Carry out and explain your market research

Conducting market research is a vital step, no matter what type of business you’re setting up. It helps to give you a good understanding of your target market and the industry as a whole.Ìý

Choosing the right market can lead to success, but choosing the wrong market could make it difficult for your business to survive. Use your business plan to show that your product or service is filling an important gap in the market.

• How to do market researchÌý

• How to define your target market

Step 4: Conduct competitor analysis

Competition between businesses is a good thing. In fact, investors can be put off if your business has no competition, so don’t be afraid to mention your competitors in your business plan. Carry out some research into what your competitors are doing well and where their weaknesses are. Use this to demonstrate how your business can stand out in the crowd and what you plan to do better.Ìý

Step 5: List your products or services

Now you need to explain your products or services in detail, including how customers can benefit from using them. Include any future product launches you have planned, as well as any patents or trademarks.Ìý

Step 6: Define a marketing plan

This section needs to lay out how you plan to market your products or services, as well as your plans for attracting and retaining a customer base, perhaps through a loyalty scheme or excellent customer service.Ìý

It should cover marketing and advertising strategies, including whether you plan to use social media, search engine optimisation, public relations and so on. It also needs to include your sales plan to explain how a sale takes place. Are you looking to sell online or in store, or both? Another key inclusion is your pricing strategy to show how much you plan to spend.ÌýÌý

• Small business marketing ideas

Step 7: Outline your funding needs

Use this section of your business plan to explain your funding requirements (if applicable). Outline how much funding you need and how you plan to use the funds. If you think you might need additional funding in the future, mention this, including how much you might need and when.Ìý

Specify whether you want to apply for a loan or if you’re seeking equity investment (where individuals buy a stake in your business). If you’re looking for a loan, lay out your plans for repaying it. If you’re looking for equity investment, explain your exit strategy – for example, selling the company or merging with another.

• How to get funding for a business

• How to start a business

Step 8: Plan your financial projections

It’s important to include financial projections in your plan, particularly if you’re looking for funding. This can include balance sheets, income statements and cash flow forecasts for the next three to five years.Ìý

These projections must be realistic, so if you’re just starting out, use research and industry averages to help you with your forecasts. Existing businesses can use their past financial performance as guidance.Ìý

• Business plan financial projections

• What is cash flow and why is it important?Ìý

Step 9: Include an appendix of supporting documentsÌýÌý

Your appendix can include any supporting documents such as legal documents, patents, permits, licences or contracts. Using this section means this data won’t clutter up your main business plan but is to hand if needed.Ìý

Step 10: Draft your executive summary

An executive summary is an important part of your business plan as it’s the first section anyone sees. However, it’s also the last section you should write.

The executive summary needs to briefly outline what your business is and how it works. It needs to be succinct but must also grab investors’ attention and encourage them to read further.

Business plan templates to use

Using a business plan template can make it easier to start writing your plan. You can find templates on the government’s as well as .ÌýÌý

You can also find other templates online and on social media, but it’s important to choose one from a genuinely successful business.Ìý

Tips for creating an effective business plan

The tips below can help you create an effective business plan and avoid common business plan mistakes:

• Know your audience: Make sure you have a target audience in mind right from the very start. This helps you to tailor the language and level of detail to your audience when you’re explaining your ideas, using the most relevant information.Ìý

• Have a clear goal: It’s important to understand exactly what your business plan is working towards, whether that’s securing funding or hiring staff.

• Do your research: Make sure you know who you are selling to, whether there is demand for your products or services and who your competitors are.ÌýÌý

• Back it up: Doing your research also enables you to support what you’re saying with solid facts. This makes your business plan more convincing.

• Consider the risks: Don’t shy away from referencing problems your business might come across. Show that you are aware of the risks and how you plan to mitigate them.

• Be clear and concise: No one wants to sift through pages of waffle, so get to the point quickly. Use graphs, bullet points, subheadings and tables to break up long sections of text.Ìý

• Proofread your document: Check for spelling and grammatical errors. If this isn’t your strong point, ask someone else to look through it for you. Make sure you have clear headings and have structured your document in a logical order.

Business plan checklist: key questions to answer

When writing your business plan, double-check that you’ve answered the following questions:Ìý

• What are your company’s mission, values and basic details?

• Who is your target audience?Ìý

• What do potential investors need to know about your products or services?

• How can your business stand out from the rest?Ìý

• What have you learned from your market research?

• How do you plan to market your products and services?

• How can you attract and retain customers?Ìý

• How do you plan to fund your business?Ìý

• What are the key financial highlights?

• What are the potential risks and how do you plan to overcome them?Ìý

Next steps after completing your business plan

Once you’ve finished your business plan, don’t simply forget about it. Review it on a regular basis to see whether you’re on track to meet your goals or whether you need to make some adjustments.Ìý

Each year, compare projections to actuals and update your forecasts. You should also review your product list and whether you need to make any updates. If there are any big changes to your business or to external factors such as the economy, you may need to review your business plan more often.Ìý

Updating your business plan regularly can help you stay focused, secure new investors, spot potential new problems and even attract new customers and suppliers.