Writing a business plan is an important step in the business start-up process. And, if you want to raise funding for your new business, you simply must produce an up-to-date business plan to show potential backers.
Even if you don’t place much importance on the business planning process, the simple act of writing down your thoughts can help focus your mind on aspects of the business which you may otherwise have neglected.
So to get you started on the right path, here are 10 business planning tips to help you produce an effective plan;
1. Do your research
Most small businesses fail because they have not researched their market thoroughly enough. You need to work out if there is a market for your goods or services, what competition there is, and how both are likely to change in the future.
2. Be realistic
Small business owners are notoriously over-optimistic about their prospects. Dragons’ Den and other shows contain countless examples of business owners whose financial predictions are wildly inflated and unrealistic.
Unrealistic goals will set the alarm bells ringing for potential partners and investors so make sure your projections can be met.
3. What is your USP?
Does your business have a Unique Selling Point? What sets you apart from the competition, and why will customers choose to buy from you instead of your rivals?
Read ByteStart’s guide on; How to develop a strong USP and how to use it to attract more customers for help on this.
4. What about the competition?
Never underestimate what your competitors are capable of. Even if you expect to be the sole player in your business area when you launch, this may not always be the case. How can you compete with existing businesses?
5. Be honest about the risks
Identify what could go wrong with your business. Real entrepreneurs are able to identify their weaknesses as well as their strengths. You need to apply this thinking to your business.
6. Impress with the Executive Summary
This part of the business plan document is the one potential investors, or your bank will look at first. It should be robust and punchy. This summarises the plan as a whole, and needs to impress.
7. Follow the standard structure
As a business plan is a formal document, we recommend you follow the standard format – from outlining your objectives, to the conclusion. You can see ByteStart’s 8-Part complete business plan guide for more details.
8. Tailor the plan for the audience
Rather like a CV, it’s a good idea to tailor your business plan to suit the audience – whether it’s a document for the owners of the company, your bank, or potential investors.
9. What is your exit strategy?
One of the first things investors will look for in a business plan is the exit strategy. What are your plans for the future? In what circumstances would you exit and how do you plan on doing so.
When you are starting a new business, the exit process might not be at the front of your mind but this guide explains Why it’s important you plan your exit strategy before you start your business.
10. Business plans are fluid
There is no point having a business plan unless you update it as the business progresses. A business plan is a working document, which needs to be as fluid as the business itself.
Don’t be shy of showing your plan to family, friends and colleagues who will typically be happy to provide honest feedback.
Remember that your business plan also acts as a barometer of your success as you go down the line. It can also prevent you from straying away from your initial objectives, and going in the wrong direction.
Last updated - 31st December, 2019