How to create a business plan

A business plan is a vital tool for anybody starting a business. It should outline your business’s business, its goals, as well as your strategies for getting started and growing.

Your business plan will serve as a roadmap for you and for anyone else you want to understand your business. This could include potential investors, or staff that you might want to hire in the future.

Whether you are just starting your business, or planning to grow an existing one, a well-crafted business plan can act as a guide on how you plan to proceed.

In this guide, we’ll walk you through how to create a business plan that is comprehensive and effective.

Step 1: Executive summary

The executive summary is the first section of your business plan; it should provide a summary of the entire plan.

An executive summary should provide an overview of your business idea, its unique value proposition, target market as well as financial projections.

While an executive summary is the first part of your business plan, most entrepreneurs write it last as it requires a thorough understanding of your entire business plan.

Step 2: Company description

In this section, you’ll provide details about your business. You should explain your company’s mission, vision and values.

Provide information about the industry you are entering, the problem your product or service solves and the competitive landscape. Make sure to highlight exactly what sets your business business apart, and why customers will choose you over your competitors.

Like the executive summary, you may want to leave your company description to last when you create your business plan to make sure it takes account of all of the following steps and sections.

Step 3: Market research

Thorough market research is the cornerstone of any good business plan. You need to understand your target audience, their needs, and how your product or service helps them.

In your business plan, you should be able to explain the size of your target market, how it has grown or changed over time, and what sort of demographics they share. This target market, and the research you need to provide, will vary by industry.

When conducting your market research, consider what sort of business you are starting. Is it a high street business with a local audience? An online business with a national audience? Or a combination of the two. Knowing this will inform your entire research strategy.

As well as researching your audience, you should complete competitor analysis. Identify the size of the competition, their strengths and weaknesses, and where you could do a better job.

The market research you include in your business plan should demonstrate a deep understanding of your market, with a clear indication of how your new business fits into, and stands out in, that market.

Step 4: Organisation and management

Provide an overview of your organisation’s structure, including the roles of key team members, if there are any.

You should provide details about your team’s qualifications and experience, as well as confirm why and how that person’s expertise will contribute to the success of your business.

If you are seeking funding, a potential investor will want to confirm that you have the right team in place to deliver your business goals.

Step 5: Product or service line

Provide details about your products or services, highlighting their features and benefits, as well as how they meet customer needs.

Make sure to discuss any intellectual property, patents or proprietary technologies that give your business a competitive edge.

You should also explain your product development lifecycle and any plans you have for future innovation.

Step 6: Marketing and sales strategies

Provide details on your marketing and sales strategies; this will inform readers how you intend to reach your target audience.

Make sure to include your pricing strategy, the channels you will use for distribution and your promotional tactics. For example, if you plan to create a business website, provide details, including how you intend to market that website.

A strong marketing and sales strategy is essential for driving growth and will be a key consideration for potential investors.

Make sure to do research to prove that your strategies can work, whether you intend to use non-paid channels such as SEO, or paid channels, such as SEM or social media marketing.

Step 7: Funding information

If you are seeking investment or financing, make sure to state clearly what level of funding you actually need, along with details on how you plan to use it.

Make sure to provide a breakdown of expenses, including:

Operational costs
Marketing budgets
Product development expenses.

Investors want to see a detailed and realistic financial plan that tells them how their investment will be utilised.

Step 8: Financial projections

Provide a detailed financial forecast that includes projected revenue, expenses and cash flow for the next three to five years.

You should make realistic assumptions based on your market research and industry trends.

Highlight any key financial indicators, such as gross margin, revenue, net profit and return on investment.

This section is crucial for assessing the financial viability of your business. Make sure to be clear or honest; if you get funding, you are likely to be held to the projections you make.

Step 9: Appendix

Make sure to provide any supplementary materials that support your business plan. This will likely include market research data, product images, legal documents, references and anything else that will support the steps listed above.

While the appendix may not be read by everyone, it can provide valuable information and context to support the assumptions or projections you have included in your wider business plan.

The appendix also provides readers with the data they need to confirm or dispute any information you have provided, often providing a jumping-off point for conversations and discussions about how realistic your plan might be.

How to create a business plan: Final thoughts

Creating a business plan should be a comprehensive process. It requires careful research, thoughtful analysis and strategic thinking.

A well-crafted business plan can serve as a roadmap for your organisation’s growth and development, providing clear guidance on how to navigate challenges or seize opportunities.

Remember that a business plan is not a one-and-done document. It can be used as a living tool that should be revised and updated where necessary. New opportunities and challenges can present themselves at any time; keeping your business plan up-to-date will help you to continue managing them, whether they are caused by internal or external factors.

Bryn Glover

Bryn is the founder and editor of WebsiteJumpStart. He has worked in the digital field for over a decade and was editor for Startups.co.uk - the UK's leading small business website - and for NerdWallet UK before launching WebsiteJumpStart to help people and businesses get online with ease.

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