Establishing how to write a business plan in the UK can be one of the most important and essential steps of your new companies journey towards success.
However, many new business owners and entrepreneurs often question just why do I need a business plan? but the overwhelming majority of established successful businesspeople and entrepreneurs very much suggest the answer to this question is definitely yes!
For both new start-ups and more established businesses, a business plan is one of the most important and crucial tools for strategic planning for the future of your business.
In this how to write a business plan in the UK guide, we provide a few hints and tips as to how to write a meaningful and successful business plan.
So what is a business plan ?
Generally speaking a business plan is a document that sets out the goals and strategy of the business, and how they plan to achieve them.
Each and every new business should write a business plan, although sometimes they could be as easy as a quick one page reminder document, or alternatively they could be very detailed and quite complex documents stretching over many dozens of pages, with tables graphs pie charts etc etc.
What are the main reasons to create a business plan?
Most often one of the main reasons for creating a business plan is to help with the application of either a business loan or potentially trying to attack angel investors or seed investors.
In this scenario, a well set out business plan is absolutely essential as you will not attract external funding without a proper business plan setting out a realistic vision of what you plan to do.
However, using a business plan for attracting external funds is not the only reason a business plan can be useful, there are plenty of other advantages for writing a business plan and then adopting it and using it continuously throughout your journey.
It can force you to spend time evaluating the proposition and really thinking hard about the strategic direction the company wishes to take going forward, as well as identifying strengths and weaknesses etc.
Writing a business plan
Think about the audience before you start your business plan. You need to think about who your business plan is for, for example, if it is for potential investors or attracting external business partners, then you need to write it in that particular way.
If it is just for personal use and you are a sole trader, then that will also be an important factor to consider when you draft your business plan.
Business plan content
You need to write your business plan so that any external party will easily be able to understand exactly what your business does and what are its objectives.
You must make sure the content is fairly simple and easy to understand, i.e. don't put in any jargon or waffle. It should be nice and easy to read, short and to the point.
If your plan is over several pages long then it's best to include a short contents page, and obviously if it's a far longer document then a contents page is essential.
Whilst business plans are individual to each and every company, the more typical ones will most likely include some or all of the following content.
A cover page with your business name / logo / address
A contents page
An executive summary of the business plan
Your company summary and structure
The personnel and staff of the business, even if it's just yourself
The services or products you plan to provide
Any market or competitor research you have conducted
A section on operations/ premises/ suppliers etc
A page or so on the financials including the forecasts, pricing, costs, profit margin, usually including at least a three year plan and potentially a five year plan, depending on what the business is.
Executive summary
Very often busy investors will only have chance to look at one part of your plan, and so you should always include a precise executive summary as this is the part that they will read.
Your business plan executive summary must provide an outline of the entire plan, so it is usually sensible to write the executive summary at the very end, once all the rest of the plan has been established and you can just grab the relevant and important facts and figures from your plan.
Your business plan must be realistic.
You must create a realistic business plan in order for both yourself and any investors to see whether your business idea is actually viable or not, so honesty is required here. You need to ensure that your business expectations, targets and goals are truly realistic and not hugely aspirational or impossible.
Whilst confidence and enthusiasm in your business plan are certainly important, and will pique the interest of any external investors or funders, you should never set out entirely unrealistic goals as ultimately they will cause you and any investors disappointment at some point in the future.
You must also know your market in depth, and thoroughly analyse your competitors, this all comes through thorough and detailed research into your potential market, and all the competition who you are likely to be up against.
Competitor activity should be addressed in the business plan, highlighting any areas where your competitors are stronger than you are, and any actions that you will take to challenge them and disrupt the current incumbents.
This will give potential investors Peace of Mind as they will see you have identified competitors, even identified weaknesses in your own offering, and have given a solution as to how you will overcome them.
As a handy tip, there is quite a fine line between exuberance and optimism and the realities of business, therefore it is important to gauge the right balance for your own business plan.
Business plan presentation
Your business plan needs to be very clear and very easy to follow as we've said before, a contents page makes it easier to navigate, and also make sure the documents are in tip top condition, which means ensuring the plan is typed out, grammatically correct, and there are no spelling errors in it.
This should all be very easy these days with modern typing and spell correction facilities online.
It does not need to be particularly fancy with all sorts of different fonts and colours, but a clean and professional image will go some way to enhancing your chances if the business plan is for external investors.
Do a final check of your business plan
Once you have completed your initial draft business plan, and written the executive summary and are happy with it, it is sometimes sensible to get it critiqued by a close business partner or friend, or leave it a couple of days and return with a fresh pair of eyes and clear mind.
That way, you will be able to spot any glaring errors, and also reconsider if you think your targets or financial projections are realistic and achievable.
Finally, now that you have written your business plan and are hopefully proud of it, and it sets out your companies strategy, vision and financial future, don't be afraid to refer to it every now and again to ensure that you are either on track, or if you are not on track, what you can do about it.
Clearly, a sole trader may not write monthly reports or KPI’s, but if you are in a business of several staff and especially if you have external investors, then they will expect at least quarterly reports and potentially monthly updates on how the business is developing, and how you are tracking your KPI’s, so be ready to report as and when required.