Business planning and strategy

What is a business plan?

A business plan is a written document that outlines the objectives of your business, the strategies you’ll use to achieve them, and the resources you’ll need along the way. It acts as a roadmap, helping you to clearly establish your goals and measure your progress against them. 

Why is it important to have a business plan?

Whether you’re a start-up or an established company, a business plan can be a highly valuable tool. Potential investors and lenders often ask to see a business plan to assess the viability of your business before making an investment decision. 

Even if you’re not looking to raise finance, though, a business plan can be a useful internal resource. By making you think strategically about your goals, the steps to achieve them, and any potential challenges, it provides a clear direction and the basis for informed decision-making. 

For your plan to be truly effective, it needs to be a dynamic document that you continuously review and update. Updating your plan on a regular basis to reflect changes in your business and the wider market will ensure that you stay on track to meet your objectives.

How to write a business plan

Business plans can vary widely and there’s no ‘one-size-fits-all’ structure. However, there are some key elements that business plans commonly include:

• Introduction (also known as the ‘executive summary’) – this is essentially an overview of what your business does and the key points from the other sections of your plan – therefore it usually makes sense to write it last. It should be informative but succinct (two pages at most).
• Description of your business and products – an explanation of your company and its history, including the type of business and legal structure, and a description of the product or service you offer.
• Market and competition – covering your target market, their needs, and how your product or service meets those needs, using market research to underpin this. You should also identify your direct and indirect competitors and their strengths and weaknesses.
• Marketing and sales strategy – key areas to discuss include positioning, pricing, sales channels and distribution methods, and the marketing tactics you’ll use to promote your product. 
• Operational structure – this section outlines all the key elements involved in running your business, such as your premises, production facilities and processes, and IT systems.
• Financial performance – a detailed overview of your company’s finances, including the balance sheet, cashflow forecast, and profit and loss statement.  If you’re looking to raise external finance you’ll need to state how much money you need, how you plan to use it and repay any borrowed money, and any security you may have available to offer lenders.
• Appendix – this isn’t essential, but it can be a useful place to put any documents and detailed information to support your plan, such as market research data or product literature.

Our how to write a business plan article covers these sections in more depth and gives some key tips to consider when constructing your plan.