How to write a business plan
If you’re in business for yourself you will need to know at some stage how to write a business plan. And this won’t just be words on paper that no one else will see, – there’s every likelihood you will actually need to produce this type of document to certain people you come into contact with.
So, in this post we will explain exactly how to prepare your business plan, and answer some important questions about business plan preparation, like:
- The benefits of having a business plan
- What preparation is needed
- The type of information included in a business plan
- Where you can get examples or templates of business plans
- Get a mentor to assist you
Why do you need to know how to write a business plan?
I’ll get more fully into the all the benefits of having a business plan next.
But ponder this. How would you go if someone were to ask you some in-depth questions about your business, things like:
- Why did you decide to start your own business?
- Who is your target market?
- How do you know if there is a need for what you’re offering?
- What sort of start-up costs did you have?
- What sort of cash flow do you anticipate for the first 12 months?
- When do you think you’ll break even in your business?
- When do you think you’ll make a profit?
To be truthful you may not be regularly asked these kinds of questions.
But what if you were talking to a potential investor or partner in your business? What would your chances of success be if you were seeking to obtain some finance from a bank or other lender and couldn’t answer these questions?
Once you know how to write a business plan and keep it updated, you will always be able to produce answers to these types of questions.
What are the benefits of having a business plan?
Apart from being able to answer the kinds of questions I’ve outlined above let’s quickly review other benefits of taking the time to prepare a business plan.
- Being able to present your plan to others shows you are serious about your business
- Your plan helps to explain what your business is all about to other people
- If you need finance this document is absolutely essential – you’ll be asked to provide a copy of this document
- The actual process of preparing your plan helps you to develop a solid understanding of the various factors that will influence the success of your business. Things like:
- an understanding of your industry, market and likely competitors
- your specific goals, and how you will measure your success
Ultimately though, your business plan is an extremely valuable tool that:
- Gives you a direction for your business
- Clearly establishes your objectives
- Help you set out an action plan to achieve your goals
- Will help you to better manage the inevitable highs and lows you will encounter along the way
- Provides a way for you to maintain your focus and your energy doing the things you need to be doing in your business
What information to include in your business plan?
There isn’t any single correct format for a business plan.
The content you decide to include will depend on who you are writing the plan for. Is the plan just for you and other key people involved in the business? Or, is it to provide information in order to gain finance, or for a potential investor.
So, when thinking about how to write a business plan for your business you might want to do a couple of things before getting started:
- Check out the information available at the Federal Government’s website Business.gov.au – there is a lot of ‘how to’ information, as well as a business plan template and guide you can download
I also came across a website where there are over 500 samples of business plans which have been helpfully organised into self-explanatory categories which are based on the type of business.
7 Suggested areas of content for your business plan
In most business plans that I’ve seen the following areas of information are commonly included:
- A title page – this will include obvious information such as your name, the name of your business, ACN/ABN number, your business address, contact details, the date of the document, the version number of your plan and a table of contents.
- A business summary – a short overview of what your business is about. Write this as a last step.
- About the business – this will be about your business structure and your management or operations plan. It will include things like the premises and location you’ll be working from, staffing, and the types of products and services to be offered by the business.
- About your market – explain the industry you are involved in, who your customers and major competitors are, your marketing goals and the strategies to be implemented to achieve those goals.
- Your vision of the future – this section could include a vision, mission and values statement. It should set out your business goals and key business milestones over say the next 5 years.
- Your finances – this section will be about how you will finance the business and include cost and revenue projections. You would also need to include any current debtor and creditor information, and a projected cash flow table.
- Supporting documents – basically this area will contain all the attachments you will include with the plan. This could be things like your resume, partner/stakeholder resumes, emergency procedures, and financial documents
Putting together this information will be a good starting point in preparing your business plan.
How To Write A Business Plan – Summary
Hopefully you can see by now that writing a business plan isn’t necessarily difficult to write.
There are plenty of examples you can search for, in addition to those I’ve included here that will guide you along the way.
To finish, a couple of points I want to reinforce:
- Your business plan could well be a multi-purpose document so you need to be clear about your audience. There will be differing versions of a business plan. One that is just going to be used internally will be somewhat different to the plan you hand over to say a joint venture partner or bank when you are seeking finance
- Your plan will need to be regularly reviewed, otherwise it’s a fairly useless document. Check you progress against your goals and key benchmarks. Evaluate what’s working in your business, and what isn’t……and change course where appropriate.
- I suggested a 5 year horizon for your plan. So, that means you will need to revisit, rep-focus and re-write as the years roll along.
Ultimately though, if you take the time to put together your business plan, and refer to it, you will discover that it is indeed a very useful document to have.
So, now you hopefully know how to write a business plan!