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What Is a Business Plan

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A business plan is a document that sums up your business – its aims, strategies, market and financial forecasts. Every business should have one and it should provide the road down which you plan to travel for the next 3/5 years. A good business plan is flexible so don't have it set in stone.

What is a business plan?

A business plan is a document that sums up your business – its aims, strategies, market and financial forecasts. It’s generally used as a way to secure funding but it will also help you gauge how well your business is doing. You should make sure it’s short, clear and well presented, and review it regularly as your business progresses.

Every business plan should have a title page, with your name, the business name, date, and details of circulation and confidentiality. You’ll also need a contents page, the main body of the plan, and any appropriate appendices, such as diagrams, statistics and spreadsheets.

What to include

Executive summary

Many business plans are judged solely on this page. It works as a ”greatest hits” summary of the key points of your plan, showing the highlights from each section and focusing on your competitive advantage, profit forecasts, how much money you need and prospects for investors.

Team and skills

Your chance to promote yourself and your team. You’ll need to include your past employment and business record, and those of your staff. Identify the strengths of your management team and how you plan to tackle any weaknesses.

Products and services

Effectively, what your business does. It should cover the type of business and what sector it is in, when you plan to start trading, what makes your product or service distinct, how products will be developed, and any patents, trademarks or design rights you hold.

Market

An overview of your market and your position within it, plus details of your customer base and your competitors. Include any market research and competitor analysis you have done, as well as plans for how you would react to changes in the market.

Selling

The nitty-gritty on how you will sell your product or service. Detail the pricing, margins, promotion and positioning of your product, how you will reach your customers, and your chosen sales method.

Operations

Practical information on your location and premises, suppliers, production facilities, required equipment, management information and IT systems.

Finances

You will need to show:

  • What capital you need
  • Any security you can offer lenders
  • How you plan to repay loans
  • Sources of revenue and income
  • The prospects for investors or lenders.

In addition to this, you’ll need cashflow, profit and loss, and sales forecasts for the next three or five years. A smart business plan will also detail the assumptions behind your forecasts and risks that might affect those figures.

Exit Strategy

You should also consider your exit strategy. How will the business end, will you be selling it to a member of staff, selling it to the highest bidder, will you simply close it down. Many of the new .com entrepreneurs plan to sell their businesses as soon as they get started.

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