Business planning is absolutely fundamental to every organisation. Planning exists at multiple levels, including the planning of specific business processes and overall strategies which aim to achieve overarching business goals. Planning is not only important to properly structure businesses processes to be effective and to eliminate waste, business plans can also be used as the basis of receiving bank loans or investor capital. The more specific and measurable a business plan is, the more useful and valuable it is to the business owner and other stakeholders.
How to write a business plan
A typical business plan projects 3 to 5 years into the future and is constantly being updated, refined and reviewed to ensure that it is accurate representing the current business position and the future organisational goals. Business plans vary in their specificity and level of detail, with more comprehensive plans being considered more valuable, but the common elements of a business plan are:
- Executive summary: like an introduction or overview, your executive summary is designed to give a snapshot of the whole business plan and relate its key elements and goals in as little time as possible. Typically these focus more on achievable outcomes and not the processes or activities required to reach them. An executive summary should be detailed enough to give an investor a solid understanding of the overall business purpose and function, but brief enough to be reviewed in a matter of minutes.
- Company description: the description is a breakdown of everything which your company does, how it differentiates itself, the markets it operates in (and its position in those markets) and its overall identity as an organisation.
- Market analysis: which consists of research into the external factors of the marketplace, the industry and the business’s competitors.
- Organisational objectives: this section sets out the goals the business has in both the short and long time. To be useful objectives, they must be specific and measurable.
- Organisation and management structure: which details the hierarchy of the organisation, the function of the various roles undertaken and the direction of workflow through the organisation.
- Product / services: a detailed overview of what your business provides to its customers or clients, including pricing, manufacturing information, product specifications and any other relevant information which could be of interest to a potential stakeholder.
- Marketing and sales strategy: a marketing and sales strategy is a crucial component of any business plan, and follows the market research conducted for the market analysis section of the planning document. The marketing and sales strategy determines how a business will get from their current market position to the new position detailed in the organisational objectives.
- Financial information: projections, forecasts and budgets are all important information to present in a business plan. When detailed specifically and accurately, these allow investors and accountants to assess the overall value of the business, which is an essential part of seeking any kind of equity funding.
- Funding request: a funding request includes the current funding requirements, future funding requirements for the period of the business plan and an outline of how funding would be utilised if it was received. Funding requests typically also include the type, the time period and the terms your business is seeking from capital providers.
- Appendix: supporting information which is relevant or interesting (but not essential) should be attached to the business plan as appendices.