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Creating a business plan

Creating a business plan
Bill Gates spent a week a year revising the Microsoft business plan

Businesses plans are a bit like exams, nobody wants to do them, but we all know they're a necessary path to get your business to the next level, and to get that much needed business funding. However it shouldn't be like that. Business plans are not complicated to produce, and a good, regularly-updated business plan will help you focus your business, and help you confront and solve some of the things that are holding back the business.

The main point of a business plan is to allow anyone to understand the underlying principals behind your business. It should look at the current market, and show where your business is in the market. It needs to identify the strengths and weaknesses of your business, and lastly it should map out what it is you are trying to achieve in the business, now, and into the future.

So how long should a business plan be?

Ideally you should get your business plan down to around 20-30 pages. The more pages you have the less likely it is that anyone will want to read it, and the less likely it is that you will update it.

You may be able to get away with 10-15 pages, and if it's a business plan for your own internal use then something even shorter maybe more sensible. You can always add additional files and add appendices such as annual accounts and sales if you believe that will help.

The main sections

Your business plan should start with an executive summary, which condenses the whole of the business plan down into less than a page. The summary should include your overall vision; a mission statement; plans for the future; the current state of the business; details on your product or service; your proposition, and any unique selling points (USPs); sales; forecasts.

The sections within the executive summary should then be further expanded in the main document.

Additional sections should include.

History and background: The business; its origins; historical performance; sales data.

The market: Size; growth rate; major players; your position; technical advances; forecasts; relevant regulations if there are any.

Opportunities: Vision and objectives; customers and their needs; target market; product or service positioning and value offering; USPs; patents or other legal protection; pricing; distribution channels; marketing plans.

Operations: Financial; organisational and human resources; and any financial requirements not yet met.

Management team: Brief background of you and your key people; and their responsibilities and relevant skills; with a list of any gaps that need to be filled.

SWOT analysis: Strengths; weaknesses; opportunities; threats.

Financial forecasts: Sales; gross margin; plus reasons behind figures; profit and loss account; balance sheet and cash-flow three-year forecasts; payback period; breakeven point.

Ideally each section should be between two and four pages long, and each section should tell a story rather than be just a set of figures and statements. Remember someone will be reading this, so try and make it interesting and try and keep a flow in each section. However it's not a novel so just stick to the facts.

SWOT analysis

Of the sections above one of the most useful for the business is the Strengths, Weaknesses, Opportunities Threats (SWOT) analysis. Analysing what your business, and you, and your team are good at, and what you're bad at, will allow you to get some real clarity on the business, and will help you work out how you intend to take the business into the future.

Be thorough in your appraisals, and don't just concentrate on your strengths, particularly if you're using the business plan to get funding from a bank or a potential business partner, as this is the area that your potential-investors will be looking at the most. They will want to know that you understand the risks in the market, and that you have answers for all the potential pitfalls that may come your way.