This isn’t negotiable. If you are remotely serious about starting up your own business you are going to have to do one. There’s no mystique surrounding a plan; it should be easy and even enjoyable to do, and it won’t cost anything except your time.You need a business plan because:A business plan is also useful because it provides you with a way of measuring the success of your business.

 

What Is A Business Plan?

A business plan is simply a logically laid out document which brings together in the same place all the information and research you’ve carried out on your business. It should also include details of what your competitors are up to, as well as other outside influences such as an assessment of economic conditions.

An economic assessment may sound daunting, but it’s not. It could just be noting that interest rates are at seven per cent and rising, and you know you’ll need to borrow £50,000 to open your livery stables. Therefore, as a result of your assessment, you decide to wait until interest rates are down to a more manageable five or six per cent.

Or perhaps you decide unemployment in your area is too high, and wages too low, to support your dream of a small but upmarket florist’s shop. Again you may decide to wait or try the town up the road which is more affluent.

Why It Works

A business plan works because it forces you to consider your business from all angles. This means what the business is, where the money’s coming from, if there’s a gap in the market and if it’s likely to be profitable.

A lot of it is estimated because you’ll be anticipating what’s likely to happen in the future. But base it on some clear and thorough initial research and you’ll be surprised, eventually, at how accurate it turns out to be.

What To Put In Your Plan

It’s got to be detailed but not long-winded. Most business plans can probably be fitted onto a maximum of about 12 to 15 sheets of A4 paper. Much longer and no one’s going to read it, but you can include back-up material as appendices.

There are two main audiences for your business plan:

• yourself
• a potential financial backer and/or business adviser.

 

It has to be interesting. If you’re bored writing about your business in the plan then you’ll be bored doing it. If your funder or backer is bored they won’t read your plan and you probably won’t get your money.

So the rules when writing it:

• Keep it snappy but don’t be flippant.
• Be precise and detailed but don’t go on.
• Keep it ordered.

 

Formats will vary, there’s no definitive way of putting together a business plan, but it should probably include the following elements:

Executive Summary

Oddly, it’s usual for a business plan to start with a summary, known as an executive summary. The idea is that many would-be backers or advisers don’t have the time or can’t be bothered to read the whole document. They’ll read the précis and make a preliminary judgement. If they’re interested they’ll go on and read the rest, but if they’re bored or not impressed with your ideas then they won’t go any further.

So it’s critical that your executive summary is well-written, informative and covers all the main points of the business plan. Again, there’s no set format but it probably shouldn’t be much longer than a side of A4. You’ll probably find it easier to write the executive summary after you’ve written the main plan.

Mission Statement

A mission statement isn’t a bit of cheesy American corporate psychobabble but a useful way of reminding yourself, your staff, customers and suppliers what it’s all about. It’s a direct statement of what you want to achieve and the philosophy behind your business. It shouldn’t be any longer than a sentence or phrase.

Microsoft, no less, keeps its mission to the point: ‘To enable people and businesses throughout the world to realize (sic) their full potential’ … though it does take a further page to elaborate on its values. Or how about this one from the women’s fashion retailer Phase Eight: ‘To offer a shopping experience that exceeds expectations and clothes that give pleasure in the buying and wearing.’

Try for yourself, something like:

‘Somerset Farmhouse Cheeses: help us spread the word that there’s more to cheese than Cheddar.’

Or it can be more literal:

‘Joe Bloggs Portrait Photography. We capture your family through every milestone. Studio or at-home portraits available. Pets by arrangement. We have the vision.’

And it’s not set in stone: as your business evolves then so should your mission statement. Stick the statement on the wall and re-read it when you’re feeling low, think you’ve lost your sense of direction or need some motivation.

A mission statement isn’t compulsory for your business plan, but if you are going to include one then it should be close to the beginning.