What is a business plan?
Starting a business is exciting. You’re bursting with so many ideas, you might be tempted to rush your plan to get to the fun stuff.
But a business plan isn’t something you write down when you’re setting up and never look at again. You’ll refer back to it often, making sure you’re hitting your goals and getting the best from the brilliant ideas you come up with at the beginning.
And if you’re looking for funding, your business plan needs to convince people to back your idea.
So it’s not an overstatement to call your business plan the ‘bible’ you’ll use to help establish your company.
And while business plans come in different formats, most of them include the same core sections. If you want to read an example business plan before you get stuck in, find out where to get one below.
Business plan examples
Before you start writing, it might be useful to get some inspiration from other business plans.
Whether you’re looking to start a business as a candle maker or dog walker, read some business plan examples to familiarise yourself with how to approach your type of business.
Once you’ve got an idea of how other businesses have written their business plan, it’s time to start writing your own.
How to write a business plan: step-by-step
How to write an executive summary for a business plan
The executive summary goes at the beginning of your business plan. As it’s a snapshot of your plan, it’s often best to write it last.
This section is common in many business documents, from client reports to business proposals for new projects.
It’s designed to hook readers with your idea, giving an overview of your plan – including what makes you different, how you’re going to market your ideas, and how much money you expect to make (and spend).
As the executive summary is at the beginning of the document, it’s important to make a good impression on your readers. We’ve got a guide on how to write an executive summary, with a quick six-paragraph plan you can use to structure yours effectively.
This is where you jump in and start talking about your idea. This section should include:
the problem – what’s the need for your business? What’s the problem you’re solving, or what’s the opportunity? Why would people want what you’re selling?
the solution – how are you solving the problem? What will your business do? How does it meet the needs you’ve identified? And importantly, how is it different?
your history – how long has your business been established? If it’s new, what’s your experience in the sector or industry?
Here you explain industry trends and the competitors you’re up against. It’s where you include the market research you’ve carried out.
This research can be quantitative (based on measurable data and statistics), qualitative (based on gathering individual experiences and opinions), or ideally both. This section should answer:
where you’re selling (and who to) – who are your potential customers and what are their characteristics? How will you target them? How many customers are you targeting? Will that number grow? Where do those customers shop at the moment? Do you have any existing customers, or confirmed orders?
market trends – how is the market changing? Is it growing? Are tastes changing? What are the reasons?
the competition – a competitor analysis answers questions about your competition. How will you attract customers from your competitors? What advantages and disadvantages do you have against them? How do you think your competitors will react when you start out? How will you respond?
SWOT stands for strengths, weaknesses, opportunities and threats. This is a very important part of your business plan, because it helps you drill down into your idea. You usually format a SWOT analysis in a grid on one page – four squares, one for each section. Then you make notes in each square.
Formatting the SWOT analysis in a grid helps you see how the different elements of your idea interact. For example:
Completing SWOT charts for your competitors too should help you see how to win business from them.
Read more about creating a SWOT analysis.
Strategy and execution
Now that you’ve done some analysis, in this section you can explain how you’re actually going to run your business.
Here you’ll include a number of sub-sections:
marketing and sales – explain more about your product and service, including its features and benefits. Talk about your pricing strategy, and how you’re going to promote your product. And how exactly are you going to sell? Which channels will you use – is it direct to the customer, online, or through other retailers?
operations – where’s your location and what premises are you looking at? Is it suitable for long-term growth? How are you going to keep accurate records (for example, of stock, sales, accounts and quality control)?
your team – are you the only one running your business or are you planning on hiring staff? How will you structure your team? Outline each team member’s experience, and what they bring. You might also want to include any outside advisors and experts you’re using, like accountants
Here you detail the numbers – especially important if you’re looking for investment. The financials need to be realistic, accurate and watertight.
Here’s what to include, presented in raw figures and charts:
sales forecasts and the cost of goods sold – estimate what your sales will be in the future, listing the goods or services you’re selling as well as the cost of each unit. From this, you can estimate profit
a profit and loss forecast – an overview of sales, cost of sales, overheads, profit and loss
cash flow statement – cash flow is what keeps you afloat – with no money coming in, you can’t run your business. The cash flow statement shows you how much money you generate over a specific time period, as well as what you’re paying out. Read more about writing a cash flow forecast
balance sheet – shows an overall picture of your financials at a specific point in time. It summarises your assets (what you own), liabilities (what you owe) and equity (the net difference when you subtract liabilities from assets)
The detail you need here depends on what stage you’re at with your business, as well as the size of your business. You might want to ask for expert help and advice on crunching the forecasts.
While the business plan itself shouldn’t be long and complicated, there might be information you choose not to include in the body of the plan itself that people should refer to.
This can include graphs, tables and notes. You can signpost the relevant appendices people should look at throughout the body of the business plan.
Top tips for writing a business plan
When you’re using business plan templates, keep the following in mind.
Know your audience. Remember who you’re writing for – is the business plan primarily for your own use, or are you looking for a loan, or even equity investment? Keeping your audience in mind will help you stay on track.
Keep it concise. Keep your plan snappy. While you don’t want to miss out crucial detail, you should also bear in mind people’s attention spans. Don’t turn in a 100-page plan.
Keep it simple. It’s likely your plan will be seen by people who don’t have intimate knowledge of your industry, so you need to make sure that it’s written in language that’s accessible to people without specialist experience.
Don’t forget the presentation. Tables, graphs and charts can help you get information across better than blocks of text. It’s also worth thinking about how to ‘pitch’ your plan to investors, potentially in a presentation that gives the toplines from your plan.
All ready to go? Now insure your new business
It’s important to look at business insurance when you’re starting out, because it helps protect you if anything goes wrong.
Most businesses should consider public liability insurance, which covers you if a member of the public gets ill or injured and blames your business.
Other covers to think about include employers’ liability insurance (usually a legal requirement if you have staff) and professional indemnity insurance, if you give advice as part of your business.
Read more articles about starting your business:
Going self-employed in the UK: a guide to get started
Which bank has the best business bank account?
How to register as self-employed
What is business insurance?