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Business plan? I can get by without one, right?

Wrong. Any business, no matter how big or small, needs one. Having a business plan is the best way to work out what you’re doing and why – plus you can keep all your thinking about your business in one accessible place. You should make it a dynamic document – one you update and refine on an ongoing basis, and use to assess how well your business is doing. So, how to write a good one? Start with these 5 key steps:
Businessman using phone in the office.

Know your business objectives

Go back to basics. Why are you running your business? What are you trying to do with it? How lofty (or otherwise) are your ambitions: Grow your coffee shop chain to take on Starbucks? Run your niche streetwear brand simply to earn some pin money? Harness your years of experience to expand your sole trader business and hire people at last?

Work out why people are (or aren’t) buying from you

What’s making your business viable, and how can you future-proof it? Or if it’s struggling, why is that? Be realistic. If you’re in a retail site where business after business has failed, why would yours be any different? What can you do to change things for the better? What is your competition, now and in the future?

Assess your finances

Do you have enough funds to keep the business going through good times and bad? Cash flow is often what kills a small business. Work out whether you can access the funds you would need for an emergency, or whether you’d need to raise finance. If you’ve identified a great potential expansion opportunity, be prepared to invest (wisely) in it. Many businesses fail due to under-investment, or else investment in the wrong areas.

Decide what the purpose of the plan itself is

You’re not ready to write a business plan until you know what you’ll use it for. Is it mainly to raise new lines of finance? Or to inform/motivate your employees? Or is it purely to enable you, the business owner, to understand where your business is at? Usually it will be a combination of all these, but whatever your scenario make sure you know and understand who you’re writing it for.

Keep your business plan succinct

Don’t write long, complex detail that no-one (including you!) will ever read again. Ensure the plan is well-presented and pithy, and includes key areas such as:

  • Objectives
  • Target audience
  • Strategy/action plan
  • Timescales
  • Budgets

If the main purpose of writing the plan is to raise finance, include key measurable targets, such as sales targets, gross margin, payback period etc to show potential investors how

they’ll make their money back. Ensure the plan is professional-looking and free of errors – show that you mean business.

A good source of help and advice is available at GOV.UK.