Every small business needs a detailed business plan. Find out how your business plan can help your business grow and succeed, why it's so important and how to get started.
This article was reviewed in April 2024.
Get started on your business journey. This article ispart of our start-up hub, which is home to even more tips and expert advice on starting your own small business.
A business plan is one of the most integralsteps in your journey to running a successful small business, whether as asole trader,partnership or limited company. It's where you'll turn your dreams into an action plan.
We’ll look at what a business plan is, why you need one and how it can shape yourbusiness.
What is a business plan and why do I need one?
A business plan is an essential writtendocument that provides a description and overview of your company’s future.All businesses should have a business plan.The plan should explainyour business strategy and your key goalsto get from where you are now to where you want to be in the future.
- How will you make your business more profitable, gain more resources or increase your assets?
- What are your plans for growth in your target market?
- Where do you see your business in one, three or five years?
It can also be an important tool for an established business that’s moving in a new direction.
What should your business plan aim to do?
At its most basic, your business plan outlineshould explain what you intend to do and how you are going to do it. You should outline your strategies across the business, including financial projections, marketing and operational plans.
An overview ofyour business
Your business plan should aim to give a good outline of your business, your businessstrategy and your action plan.
- How willyoumake money and whatdo youneed to do to achieve your goals?
- What are your targets and how will you meet them?
Knowing your long-term goals will help you to take steps towards them in theday-to-day running of your business.
It should also act as a benchmark for the performance of your business.Look at your competition in your industry and think about whyyour business will succeed where others might fail.You might want to carry out a competitor analysis to give you a greater understanding of your space and where there have been recent changes or innovations.
You know your business best
Your business plan willshow that you have a clear understanding of your business and the market it will operate in. It should set out how you expect it to performin the coming years and how you will overcome any potential obstacles.It should also be a useful tool to:
- Focus and develop ideas
- Identify your business priorities
- Think through options, identify opportunities and make the most of them
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Explaining your funding requirements
Most banks and lenders will require a detailed business plan for loans, including start-up loans, so financial planning is a must.An in-depthplan will helpyou toconvince banks, potential investors and other key contacts to support and fund you to grow your business.Our guide to finance forstart-upstakes you through what you’ll need to consider when writing a plan with financein mind.
Attracting talent
As you grow, you might looktohire employeesand expand your resources.The plan can also be important for attracting new senior management, business partners and distributors.
- What is your company’s vision?
- What is your mission statement?
- Why would someone want to work with you?
What should your business plan include?
A business plan should include seven key sections:
- an executive summary
- a business description
- details of market strategies
- competitor analysis
- a design and development plan for your products and services
- information about your operations and management plan
- financial information, planning, andfactors
The section containing your financial factors should include your income statement,cash flow forecast or statement, and balance sheet. This should aim to provide an accurate picture of your company’s current value and your ability to pay bills and earn a profit.
Updating your business plan
A business plan is one of the big steps when you start a business, but it shouldn’t be forgotten. By revisiting and updating your plans regularly, it becomes a tool for measuring your success or supporting you in moving in a new direction.
Ready to start your business plan?
Get your business off to a flying startwith the Federation of Small Businesses. Ourmembers get access to a detailed business plan template as well as 24/7 legal advice and over 1,400 legal documents, templates, and guides.
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