How to write a company business plan
What is a business plan?
A business plan is essential when you’re starting a small business and when you’re approaching third parties for loans or other types of investment. It provides details about your company and your offer, the marketplace in which you operate, your goals, and how you intend to achieve them over a set period of time – typically three years or five years. Think of it like a roadmap that you follow to get where you want to go.
A business plan doesn’t exist on its own, though. When you’re applying for investment, lenders will assess your credit score. That’s where Credit Passport is invaluable, providing you with a real-time business credit score, together with a pre-crisis report showing the state of your company finances before the COVID-19 epidemic.
Who needs a business plan?
When you’re in the startup phase, you won’t have much to show for your efforts besides good ideas and (hopefully) some investment. So your business plan could also be important for encouraging potential employees, suppliers, distributors and customers to come on board in the early days. If they’re clear about your goals, as defined in the business plan, they’ll be better placed to help you achieve them. A well-written business plan shows that you have a clear understanding of your company, its business strategy and action plan, and the funding you need to achieve your objectives.
A well-written small business plan shows that you have a clear understanding of your company, its business strategy and action plan, and the funding you need to achieve your objectives.
What goes into a business plan?
There’s no prescribed format, but business plans typically contain 7-10 sections, such as:
- Executive summary
- Description of your business
- Marketing and sales strategy
- Competitor analysis
- Design and development of products/services
- Operations, staff and management structure
- Financial plan and projections
- Appendix (if required)
It’s important to be realistic and honest, noting the challenges as well as the opportunities. Picture yourself presenting on TV’s entrepreneurial gameshow Dragon’s Den! You know that the “Dragons” will have plenty of probing questions. You don’t necessarily need to anticipate every single question but your claims need to be meaningful and your ambitions realistic.
What is the most important section?
The executive summary. Lenders are sent so many business plans that you need to win them over quickly, and the executive summary is the first part they’ll read. It gives them a first impression and indicates what the rest will be like. It needs to grab their attention so they feel like they’d be missing out not to read the rest of the plan at the very least, and hopefully invest in you. It’s easiest to leave writing the executive summary until you've written the rest of the plan because it should be a summary of the other points.
The executive summary is the most important section of a business plan. Lenders are sent so many business plans that you need to win them over quickly, and the executive summary is the first part they’ll read.
How should I present my business plan?
Your business plan should be between 20 and 40 pages long, and able to be read in 15 minutes if it’s intended for third parties such as external funders. (If it’s for internal use, it can be shorter).
Be concise and cut to the chase. Ask yourself if there’s any “waffle” it in and, if so, edit it out. The longer the document, the longer it will take a potential investor to read!
In terms of presentation, ensure that it is easy to read and engaging, with plenty of white space along with tables, graphics and pictures of products. Use bullet points and headings to make it easier to scan.
What if my company is changing direction or doing more online business
If your company is changing direction, it’s vital to write a new company business plan or at least heavily modify your existing one. For example, your business might be looking to trade more online as a result of COVID-19. Or you might be looking to establish a new online business. Either way, you’ll need a new company business plan that reflects your new goals and emphasis.
How often should a business plan be updated?
Your business plan should be constantly revised. The whole idea of a business plan is to keep your business on track, so it makes sense to compare your targets with sales figures as frequently as possible. That way, you can identify which areas of your business you are succeeding in, and which need attention. The best way of doing this is with a real-time view of your finances and credit rating.
Credit Passport provides this by securely accessing your banking information to create a credit score that you can use to apply for lenders. In fact, you can apply for funding direct from our own portal. Once a year, it’s worth taking a fresh, objective view of your entire company business plan. What worked? What didn’t work so well? At this point, you may need to rewrite it to set more challenging targets or otherwise revise your expectations to fit financial reality.