If you're planning to launch a start-up or small business, this guide on how to write a business plan will help you create an effective road map to success. A thoughtfully researched, well-structured business plan can give you greater clarity on your business’s vision, help you avoid potential pitfalls and can help ensure you stay on track for your business goals. Read on to discover the essential elements of business planning, common mistakes to avoid, and business plan tips on how to make your plan compelling and ready for investors.
A business plan is a strategic document that details your business's objectives and the steps you’ll take to achieve them.
It is a tool that covers everything from your business strategy and key goals to financial projections and management structure. A business plan is also your opportunity to describe your company or proposed project in detail, showcasing both your short-term and long-term goals, budget details, and unique selling propositions (USPs).
Let's dive into understanding what a business plan looks like, why it's so important, and how you can create one for your business.
A business plan is important because it helps you create an effective plan for your new enterprise that allows you to make informed decisions, set clear goals, and manage your enterprise effectively.
The importance of a business plan becomes clear when you want to set your business apart from the competition.
Here’s how a business plan can help:
When you write a business plan, there are important questions you need to consider.
The first step is understanding your target market. Who are they? What do they need? How will your product or service cater to these needs?
Your business plan should be designed to serve this audience. You’ll need to conduct thorough market research and include this data in your plan.
The second step is to clearly define your business goals. What do you want to achieve in the next year, five years, or ten years?
Having clear, measurable objectives will guide your business plan and help you stay focused on your end goal.
Next, consider your unique selling proposition (USP). This is what sets you apart from the competition. Highlighting your USP in your business plan will not only help you stand out but also attract potential investors.
The financial aspect is another key factor. You need to have a clear understanding of your financial needs, cash flow projections, and profitability forecasts. This information is particularly important if you're seeking funding from investors or lenders.
Lastly, remember that your business plan is a living document. It should evolve as your business grows and changes.
Be prepared to review and update it regularly to reflect new goals, strategies, or market conditions. This flexibility will ensure that your business plan remains relevant and effective.
When developing a business plan, it can be helpful to first look at business plan examples in your relevant industry. There is no fixed business plan template, but many plans will include the following elements:
Your business plan should start with a succinct overview of your plan that highlights the key points and creates a strong initial impression. It should be compelling enough to encourage readers to read further.
This section should provide an overview of what your business does, the problems it solves, and the market it serves.
The market analysis section requires a thorough understanding of your industry, target market, and competition. You should demonstrate knowledge of market trends, customer needs, and the competitive landscape.
Define both your short-term and long-term objectives to provide a clear vision of where you want your business to be in the future. You can also describe how you plan to achieve these goals.
You should describe what you're selling or what services you offer, highlighting how your offerings stand out from the competition.
You should include a detailed overview of your finances, including cash flow statements and profit projections. This section shows potential investors that you have a solid understanding of the financial aspects of running a business.
Your business plan is a marketing document. It should be concise, engaging, and persuasive, convincing potential investors, partners, and employees of the viability and potential of your business.
Business plan format can vary depending on industry. For instance, a restaurant's business plan might feature a sample menu and location demographics, while a tech start-up may focus on development timelines and patent protections.
A small business plan is likely to look very different to a large business plan. Tailor your business plan to your specific industry and business type.
The complexity of your business plan might also depend on its purpose. If you're seeking significant investment, you'll need detailed financial projections. However, if the plan is mainly for internal use, you might focus more on strategy and team organisation.
In short, while there are common components in every business plan, the specifics can vary widely. Ensure your business plan is relevant to your industry, audience, and business needs.
Writing a business plan requires research and attention to detail for each section. Below, you’ll find a 9-step guide for researching and defining each element in the plan.
This is a brief overview of your business plan. It should include your business’s name, location, and the products or services you offer. Also mention your mission statement and your business’s USP (unique selling proposition). Remember, the executive summary should be concise yet compelling, persuading the reader to learn more about your business.
Your executive summary should include:
Describe your business in detail. Include the business structure (sole trader, partnership, limited company), the nature of your business, and the marketplace needs that your business aims to fulfil.
This is where you demonstrate that you understand your industry and market. Include information about your target customers, including their demographics and buying habits. Also analyse your competition, outlining their strengths and weaknesses.
What else to include:
Outline your business's organisational structure. Identify the owners, management team, and any key employees. Include an organisational chart if possible.
Describe what your business offers. If you sell products, explain how they are produced, their cost, and how you will sell them. If you provide services, describe them in detail, and list any associated costs.
Detail how you plan to attract and retain customers. Include your sales strategy and the marketing channels you plan to use. Here's what it should include:
Your marketing and sales strategy should be flexible. As you learn more about your market and customers, adjust your strategies accordingly.
If you are seeking investors or applying for business loans, you should include a funding request section within your business plan. It should include:
When considering where to secure funding, it's essential to explore your options. You may want to consider our app-based HSBC Kinetic Current Account for sole traders and single director shareholder businesses, or our Small Business Bank Account for small enterprises. Eligibility criteria apply.
Both accounts are designed to support the growth and financial management of your business. These platforms provide a range of services that cater to your business's needs, from daily transactions to long-term financial planning.
Provide a forecast of your business's financial future. This can include balance sheets, income statements, and cash flow statements for the next three to five years. Consider incorporating HSBC Kinetic into your financial planning for a comprehensive and digital-first approach to managing your business finances. Eligibility criteria apply.
Here are examples of what to include:
Your projections should be realistic, with all assumptions clearly stated. If you're a start-up with no financial history, base your projections on research and industry averages. If you're an existing business, use your past financial performance as a guide.
It can be beneficial to seek professional advice when preparing this section of your business plan, as it will be scrutinised by investors and lenders.
An optional section that includes any additional supporting documents such as legal documents, permits, and contracts.
Writing a business plan is not a one-time event. It should be updated regularly as your business grows and changes.
Starting a business plan generally involves seven practical steps and may require consultation with other professionals. Here's a step-by-step guide on how to start:
