What is a business plan?

Many people believe that the purpose of a business plan is to enable you to borrow money. Nothing could be further from the truth. Of course, no bank manager or business Angel will lend you money without a realistic business plan, but its main purpose should always be to help you manage your business and enable you to spot trends before they become problems.

The business-pleasant essential management tool that you should be constantly referred to and updated whatever is necessary and certainly at least once a year: 

You use your plan as a map and compass with which you stay at your business to success. 

Write your business plan in such a way that a third party who has never met you will take a clear picture of what you intend to do. Try to answer as many of the potential questions as you can.

The plan consists of five parts. 

• The introduction:

A reader will want to know ‘What is the business’ followed by ‘ Who is this person? This is where you explain what the business is all about. Who will run it, their qualifications, which will cover for them if they fall ill, or go on holiday? You will include details of where the business will operate what equipment is needed, how the company will trade, and any capital requirements. 

• Market research: 

This is how you check that there are potential customers for your service or product. You will need to find out about the competition and what their reaction to you might be. You will also have to research your suppliers.

• Marketing: 

Once you have decided that there are customers for your product or service, you will then have to develop a strategy to persuade them to buy from you. This is called the marketing plan, and this is a vital part of the business plan.

• Finance:

You are in business to make a profit, so you need to calculate if this is possible. However, you also need to know if the business will support you, and so you have to work out your survival budget. (What you need to live on). To calculate this, you will need to produce sales and financial forecasts. 

• Appendices

This is where you put any additional information such as your CV product price list, equipment specifications etc. 

Writing a business plan.

Title page

When you have completed your business plan, it will look more professional; if you produce a front cover or title page, it should include: 

• The name of the business
• Your name and address
• The contents of the plan

1. Introduction to the business

This includes: 

• A description of the business, including the business structure
• A profile of you and other key people
• A description of the premises and equipment you require

A description of the business

Describe what the business will be, including the range of services or products that you will offer. Next, state what the business’s legal status will be, also known as your trading status of business structure. There are three types of legal status. 

• sole trader
• Partnership
• Company

2. Market research

The second section of your business plan will need to cover the three main areas of business research: 

• Customers
• Competitors
• Suppliers

Customers. 

Explain in detail how you have established that there is a market for your product. Describe what market research you have done and the survey method you have used. Explain why you have used this method.

Whatever market research you do, to keep it consistent and produce accurate information, you will have to use a questionnaire.

Ensure your questionnaire answers these questions: 

• How many potential customers are there?
• How often will they buy your product/service?
• How much will they pay?

“Figures where appropriate. Include a copy of any questions used and a summary sheet showing the result.

Competitors.

List who your competitors are and where they are situated concerning your business. Assesses what their strengths and weaknesses are. Then, outline your unique selling point regarding your business’s advantage over there (I.e. Quality, service, price, etc.). 

Try to evaluate how they might react to you started in competition with them.

Suppliers and stock.

List your major suppliers and what you will purchase from them. Explain why they have been selected and what alternatives there are if items are required quickly and are out of stock with the supplier. Indicate the trading terms required by suppliers.

As part of the section, you can briefly indicate your requirements for holding stock.

3. Marketing plan

The third part of your business plan should cover all areas of your marketing plan. Starting with:

Target customers.

Firstly, you should define who your potential, or target, customers are. Explain

• Who they are
• Where they work
• Where they live
• Where they play
• Why they purchase your products

Complete a customer profile of your potential customers, including

• Age
• Gender
• Marital status
• Income bracket
• Lifestyle

This information will help you to place your advertising accurately. A marketing plan is a timetabled action plan showing how you are going to get customers.

The timetable should include;

• What advertising/promotions you intend to do
• What it will cost
• What results you hope to achieve
• An evaluation date

The results of your evaluation will be used for planning and your next marketing effort.

Advertising and promotion.

Outline how you are going to launch your business; 

• What are you going to do?
• How often?
• Where and when?
• What results do you expect?
• How much will it cost?

Outline your ongoing promotion and advertising strategy, answering the same questions. Your budget for marketing should be reflected in the financial section of the business plan.