Business Link Guide to writing a Business Plan

Helen Cracknell, from Business Link, the Government’s network providing practical guidance for small and medium-sized enterprises looks at how to write a business plan.

Introduction

A business plan is in fact one of the most useful and effective tools that any and every business should use and regularly review, regardless of the industry. This is because it provides an overview of what your business does, what you may want it to do in the future, and the ways you will be able to do this. In short, it says where you are now and where you want to go.

In most instances, people write their business plan when they are starting up so they can raise finance from a bank or investors. But even if you are an existing business without a plan, then there is a lot that can be taken from creating a business plan for your business as an ongoing way of working.

Sticking to a good plan will allow you to achieve your targets, grow your business and make more money. It will also mean that you can spot where you may be going wrong in running your business and identify areas for improvement, as well as adding more structure to the financial side of your business. Instead of just taking one day or month at a time, writing or reviewing a business plan helps you get a longer-term focus.

Maybe you want to look at how you can generate more revenue by conducting electrical safety reviews? Perhaps you are thinking about opening up a office in a neighbouring town or village and need an investor? Perhaps you just want to grow your business by boosting sales. These are just a few examples of how your business may be developing and are the kind of things that can be built into a plan.

Before you start writing, think of your business plan as a statement of intent, outlining how you are going to develop your business, when you will do it and how the money will be managed. The plan encompasses several areas, but it is best to think of them as chapters. The content of each area will vary depending on the size of your company and what you plan for it.

The six main areas below are a good starting point and provide you with the structure to write your business plan:

1. Executive summary
2. Background information
3. Marketing and sales
4. Management and staff
5. Operations
6. Financial information

This is the first part of the business plan, and so also the most important. If you are looking at setting up a business or are simply after a bank loan to fund expansion then this is the first thing the bank manager will read. Essentially, the executive summary is a snapshot of your entire plan, listing the most significant points from the other sections.

You should make your executive summary practical and interesting so the reader learns about your business but is engaged at the same time. In no more than two pages, it should give an overview of what the business does and how it works.

Background information the business, your products and services

This section should explain the vision for your business and why it is workable. In short, you need to explain three main areas, the business, your products and services. You should also outline who you are, what you do and what you can offer the market or the customers you are targeting.

The next element is to cover off some more practical background information, such as your legal structure, when the company was founded, any history or developments of the business and the plans you have for the future. Try and avoid using complicated language or jargon as the person reading your business plan may not be a specialist in the electrical industry.

Marketing and sales strategy

Again, this is another crucial part of the plan as it explains how you sell and whom you sell to. The best way of writing this section is by thinking through the different stages of the marketing process.

Ask yourself who your customers are, how you can reach them and how you can attract new ones. Also think about promotion and how you can communicate what your business offers to your market – do you advertise, use direct mail or even use PR?

If you do not already know about your customers then ask them what they want from you or what would make your products or service better for them. Their feedback will allow you to build marketing activity into your business plan.

Other key areas to consider are sales and pricing. How expensive or cheap are your products compared to other local outlets? Do you run promotions or deals on certain lines? Think about this and reference it in your business plan.

Management and staff

This element of the plan will depend on the size of your business. If you are a chain, then you should take this opportunity to illustrate your management structure and the direction it is taking you in. An independent store with a small team or lone operators won’t need to emphasise this area, but it is something that should still be addressed.

In both cases use this part of the business plan to showcase your business’s people, their skills and experience. In the same way you would write a CV, try and ensure that a mix of business skills is referred to. This could include marketing, customer facing or financial skills.

Again, more practical details should feature here, such as staff numbers, the kind of team you lead and any plans to recruit or train more staff.

Operations

This is where you should explain the logistical side of the business and like the previous section its content is very much dictated by the size of your operation.

The principal things to include are information on your premises, your facilities and your systems. Give background on each of these, explaining who owns them and what exactly they comprise.

For example, if you have a sophisticated IT system, or customer information database, then explain this and say what it does. As an asset, it is part of your balance sheet and it also effects the day to day running of your business. This section should also refer to any plans to improve or replace these and how this will improve the business.

Financial forecasts and cash flow

Anyone wanting to run a financial health check on your business would turn straight to these pages, as it translates everything you have written in the plan into numbers and ultimately, gives the bottom line.

If you are looking to source capital then it is important to outline how much investment you need, the security you can offer lenders, how you will repay the borrowings and the sources of revenue and income.

You should also include financial forecasts, which incorporates cash flow forecasts, profit and loss accounts and sales forecasts. Not only does this indicate how much working capital the business has, but also helps the reader understand how profitable your business is.

If you are unfamiliar with putting together financial documents or forecasts then you should approach your local Business Link for guidance. Alternatively, more information is available on the Business Link website.

Whether you are looking to open a business, considering expansion or simply getting yourself in good shape, writing and following a business plan has many advantages. Ultimately, it should help you develop your business and make more money, whilst helping you improve your operations, service and your future.

About Business Link

www.businesslink.gov.uk/businessplan offers a range of tools and resources to help develop all areas of your business plan as well as offering top tips on the effective presentation of it.

www.businesslink.gov.uk/growth shows the importance of a business plan in the development of your business - whatever stage in the business lifecycle you are currently at.

businesslink.gov.co.uk