Creating a Small Business Plan

Why Write a Business Plan?

It's easier to be passionate about the future if you can see where you are going and how you are going to get there.

Everybody needs a map, direction, a guide to help them get to where they are going. Your business is simply too important to leave to chance, just like your life. A plan is especially important if you intend to untie that safety net of a salary to jump into the abyss of self-employment. 'Jump and the net will appear' may be a valid quote, but it's best to have a plan A (and B).

Be realistic when writing your business plan, because over-zealous projections can create problems later on and can damage credibility to those who can see through the generous forecasts.

What to Include In Your Business Plan

Your business plan needn't be packed with detail. You can elaborate in your marketing and operations plans. The business plan should be fairly short and concise. Include the following content:

1. Name , address and contact details of the business along with the business status (ie sole trader, partnership, limited company, franchise).

2. Contents page with page and section numbers.

3. An executive summary which defines your entire business proposal and details the key points, including the objectives and purpose of the business plan. Provide details of when you intend to start up, plus any track record within your industry. Although the executive summary is often the last part of the plan to be written, it goes on the first page and will be read by people unfamiliar with your business, so make it clear. Also bear in mind that some financiers will only ever read this section of the plan, so it needs to stand out and summarise everything clearly.

4. Business and products - what progress do you perceive will be made once launched, and in which markets? Talk briefly about ownership and describe the product or service.

• What will make the business unique or different? How will it be differentiated from other similar products or services?
• What are the benefits you will offer to customers? Will you save them time or money, make their life easier or safer.?
• Are there any disadvantages or problems?
• How are you planning to develop and grow the business?

5. The market and competition - explain which markets you will sell in and segment the market into groups that you will compete in.

• What is the size of each market segment and your intended share of it?
• Are there any noticeable market trends, changes in tastes or growing market areas?
• How might these affect your business?
• What drives the market?
• Are there any growth forecasts for the market segments in which you operate?
• What contribution to profit do you think each part of your business will make to the overall business?
• Give details about the primary competition. What do and don't they offer? Are there any windows of opportunity? Who supplies, distributes or partners them? Who are their biggest customers? How does their product or service compare to yours? What are the key differences and how do they market their business? (Use your competitive intelligence report notes about your competition from your fact-finding mission).

6. Marketing and sales - outline how you intend to reach your target markets and give details of price, product and positioning.

• Where will your product or service be positioned in the marketplace - as a high quality item with a high price, or as a budget item or service? Is there high demand? How will you price your service/products?
• What are the unique selling points of your product or service and which of these are of primary importance to your customer?
• Who will be the end user?
• How will you reach the end user and promote your business?
• What selling methods will you be using: face to face, telesales, website sales.? Do you think your idea has a great angle that might get you some good PR - some local or national TV, press or radio coverage? Would the idea translate well to the internet for online selling, or would it sell best at exhibitions and events, or over the counter?

7. Management and personnel - detail the proposed or existing management team structure and list management members' expertise. Outline any areas of weakness that could be improved, plus how they might be improved.

8. Operations - describe assets and premises that you have or intend to purchase.

• What machinery, equipment or premises will you need to buy or do you own?
• Will computers/IT be used within the business and how?
• What communication, customer services and operations procedures and processes will you put in place?

9. Financial performance - include your financial forecasts and estimates of what you will be likely to pay out and receive for the first year.

• List direct costs and outgoings as you see them.
• Figure out cashflow by reviewing dates your payments will come out and ensuring that enough money will be coming in to the business to cover them.
• If using the business plan to raise finance, use these figures to predict what cash you are likely to need (adding up to 20 per cent contingency to any funding requirement outlined in your forecasting).
• Explain why the money is needed. Are you funding start-up? Are you funding growth?
• Acquiring new customers? How so?

10. SWOT analysis - create a one-page analysis of the strengths, weaknesses, opportunities and threats for your business. Your market research will help. Outline briefly what you intend to do to make the most of your strengths and opportunities, and how you intend to smooth out creases and deal with threats.

• Strengths: you may have a great name, idea or niche product.
• Weaknesses: however, you might foresee low profit margins initially, problems recruiting decent staff or may rely on a few customers for the bulk of your sales.
• Opportunities: your biggest competitor may have gone out of business or you may have seen the chance to target a new and growing market.
• Threats: your biggest competitor may have grown or is now offering a unique service or product that you are unable to offer. A new competitor or economic pressure could also threaten your business start-up.

11. Visualise the future for your business and what you want to achieve. Then create objectives, tasks and actions. Refer back to your written goals.

• How do you intend to grow your business and achieve your targeted market share?
• Where do you want the business to be in one year, three years and five years?
• List what you want to achieve and by when. Note who will carry out the action or task to make this happen. Explain how you intend to reach these targets and exactly what needs to be done in order to do so.

12. Include an appendix to add more detailed information, such as market research, company or product literature. You might also include more detailed financial forecasts in the appendix, along with CVs of key team members, target customer details or anything else that will add credibility to the business plan.

Have you revealed the answers to these questions in your business plan:

• How will I get from where I am now to where I want to be?
• How will my business operate?
• What do I need to do and what finance am I likely to require?
• Where do I go from here?