When you’re starting a business or planning to expand, having a business plan can help to get you on track and get some detail behind your ideas.
However, many businesses don’t have a business plan. So what are the advantages of business planning and how could it help your business to succeed?
Benefits of writing a business plan
Jennifer O’Toole, Senior Partner at accountancy firm Thomas R
“A business plan is like a flight path. It lets
you know where you want to go, what you want to achieve, what you have
in order to achieve your goals and probably most importantly what
problems you can expect along the way.”
“Being able to identify potential threats, problem areas that
could affect the business, and to be able to develop coping strategies in
a proactive manner rather than in a reactive stance, is key to business
It’s also a great way to share information about your business,
to develop your thinking and test scenarios before you make any changes
(like leaving your job and going it alone), and it gives you a way to
measure how things go when you do start up.
And if you’re looking for finance, then a business plan can
make a difference. Rebecca McNeil, MD for Business Lending and
Enterprise at Barclays in the UK says, “A strong plan can help
applications for finance from a business loan to alternative forms of
finance and investment.”
Reasons people skip business planning
If it’s so helpful, why don’t more people choose to have
one? Here are some of the common challenges:
- Time: if you’ve thought through your
business, it shouldn’t take long to create your business plan
plan. Keep it short and simple and choose a format that works for you.
- Uncertainty: it’s true that you
can’t know what will happen until you start a business but a plan
can help you spot potential pitfalls and helps you to understand the
finances behind your idea.
- Lack of agility: some people think business
planning stops businesses evolving, but a good business plan should be
current and adapt as you test and learn. It needs to be part of the
business, not left in a drawer.
The best format for your business plan
Many people assume that a business plan will be a hefty document
containing lots of facts and figures, but it doesn’t have to be.
The key thing is to choose a format that will work for you and your
business. That would be:
- One you’ll use: something that can become
part of your day-to-day business rather than something you’ll
never refer to. Have your business plan on the wall as a manifesto or
mind map, make a presentation or create a visual guide - whatever works
- One that makes it simple to express your views:
if you’re a writer, you may be happy with a document, a designer
might like a more visual medium. Your business plan should excite and
inspire, so pick a format that lets you do that.
- One that’s shareable: a business plan
will be seen by lots of people, from your bank manager and accountant to
prospective investors or employees, so pick a format that makes it easy
What to include in your business plan
What should a business plan include? Every plan is likely to be
different but there are some common pieces of information that are often
- An overview of the business - what does it do
and what makes it different?
- Goals - what does the business want to achieve?
This should set some SMART objectives that will quickly show if the
business is succeeding.
- Your audience and the market - who will your
business supply and how will it reach them? How big is the market and
who are your key competitors?
- Products and pricing - what will you be selling
and how will your prices be set? How does this compare with your
- Who is involved - many investors say they
invest as much in the people as they do in the business. Share some
information about people’s roles, experience and passions.
- Financials - provide details about sales, costs,
break-even points and where investment will come from. If you’re
looking for people to invest, you should include information about
likely returns. If you're looking for alternative ways to finance your
business, crowdfunding is a good
place to start.
Some business plans will include other sections, like a SWOT analysis
or a full marketing plan. You might find these useful for your business,
so feel free to include them too if you wish.
How to use it
Many business owners invest time in producing a business plan and
then never look at it again. While it’s valuable to get your ideas
clarified and to test your thinking before you launch your business,
it’s even better if it’s embedded into your day-to-day
As Jennifer says, “Business planning is a continuous process -
from the initial start up any business to stage two of developing and
growth of existing sales and developing new income streams.
“As established businesses mature and diversify, business
planning continues to play a fundamental role in ensuring that the
company’s long-term strategies are being met.”
Here are some ways your business plan can work for you:
- Take the sales, cash flow and expense predictions and measure
them against your actual figures. This helps you spot whether
you’re on track and if things need to be revised.
- Revisit your goals every month to how you’re progressing.
- Keep updating it to include customer input and quotes. Real
feedback is essential for keeping a business on track.
- Revisit it once a year to see if changes to the market,
technology or competition has had an impact. Businesses need to continue
to evolve to survive in the longer term.
Where to get help with your business plan
Sometimes you’ll need additional information to pull together
your plan. You could:
Download your template
- Speak to your accountant. They don’t just
help you with the financials, they can also offer advice about planning
- Talk to your bank. Many have small business
experts who can help.
- Use business planning templates. Our free
easy-to-follow template (.doc) will help to make the process easier: