At Johnson Reed, clients often approach us seeking the secrets behind the perfect business plan to maximise their chances of raising required finance on the best terms.
With over 50% of UK entrepreneurs having been denied a bank loan, it’s no wonder business owners are apprehensive.
Whether you’re a new start, growing or established business, a comprehensive plan is crucial to your success. Stick with us as we take you through our key considerations and top tips.
Why write a business plan?
Creating a business plan is an invaluable exercise; helping you clarify ideas, outline objectives, identify where you fit in the market, measure progress and spot any potential areas of weakness.
Not only a useful resource for yourself, your business plan could be a crucial supporting element when raising finance or attracting new business partners.
Even once you’ve successfully started-up your business, you should refer to your plan at regular intervals. Remember to keep it up to date and include any important developments and project plans.
How long should it be?
A common misconception around business plans is the idea that they need to be long, 50-page documents to be taken seriously, which is certainly not the case!
The best business plans are kept simple, thorough and comprehensive. They should be reviewed regularly and easy to amend as you go along.
Its exact composition is unique to you and your business, but we would recommend sticking to the facts and linking observations to relevant figures and research where possible, demonstrating you have a solid grasp of the market and where your concept fits in.
What do I need to cover?
With so many different elements to consider, the process can understandably seem a little daunting. Get started with our step by step plan below.
1. An overview of your business- Try to summarise what you’re creating and why. What are your objectives? If you’re taking on another business, where do you aim to go? What’s your unique selling point?
2. Structure- When did/when will the business start trading? Are you a new start? If you’re taking on an existing business, what was the original ownership structure?
This is a good place to identify the key players within your business, their roles and responsibilities, and any relevant experience. How are you going to expand your workforce moving forward?
3. Your premises- Where will you be based? How have you acquired the property? Is your location suitable and easy to find for customers and clients? What impact will the local area and any neighbouring businesses have on your business? Do you have the required space and facilities to accommodate your operation?
4. Your market- Where do your products or services fit? Are you good value and affordable? Are you high quality with a matching price tag?
Mention any relevant regulatory bodies in your industry, and how these inform what you do or how you do it.
Think about your competition- whether that be on a local, national or even global basis. Consider the strengths and weaknesses of main competitors, and where you fit or fill a gap in the market.
Thinking from a customer point of view, why would customers use your services or products instead of those of your competitors? Back up your points by drawing from your market research, but again, remember to try and keep it to the point.
5. Equipment- What is needed for your everyday operations? Who are your suppliers? How are you going to acquire the equipment needed for your operation?
6. Marketing- Who makes up your audience, and how will you target them effectively? Will you create social media profiles? Will you distribute press releases or aim for coverage in relevant trade publications? Will you invest in advertising? Do you have a specific budget or employees set aside?
Think about where your customers ‘hangout’ online – or offline as the case may be – and be there.
7. Financial health- What have you contributed to the business financially? Are you eligible for any grants or government funding? Are you trying to attract investors into the business? When do you plan to break-even? Is your cash sufficient enough to survive up to this point?
Provide historical information for the business, if applicable. You’ll need to calculate your forecasts, working out both the best and worst case scenarios for the next year of trading.
Planning ahead and identifying any potential areas of weakness will allow you to identify whether you need any financial assistance moving forward, whether it be a lease to fund your vital equipment or a short-term VAT bill loan to support your cash flow.
If you’re writing your plan to raise finance, you must detail what the cash will be spent on and how that will directly impact your turnover, profitability and ROI.
Extra Tips
• When writing about something you’re passionate about, it can be incredibly easy to get carried away. Try using bullet points to layout your main points, elaborating with short explanations where necessary.
• Avoid using complicated technical jargon where possible. Try running your plan past a contact outside of the industry to ensure it makes sense in layman’s terms.
• If you’re struggling to map out your vision, why not brainstorm with the Lean Canvas model? This one-page plan is advocated by many experts, and can help you whittle down your ideas to the very essentials.
• Keep your in-depth market research, facts and figures in an appendix.
