Key Components of the Business Plan
These elements will form the foundations of your Business Plan.
Embrace this as your manual, your blueprint for success; a tool that collates all the essential elements of the business; an organic plan that changes with you and your business during your development and growth.
Below is a list of 12 elements you need to consider when creating your business plan.
- Business aim and mission statement: This is the core statement of what your business is going to do and why it's going to do it.
- Business description: You need to define your Business Brand and your unique selling points. What makes your business different? What is your personal brand? Do you intend to sell yourself, a product, or a service? Will you be making the product or having it made for you? Will you be providing the service yourself or employing other people? What will the features and benefits be of what you’re selling be? Find out more about Branding.
- Your customers: Who is going to buy what you’re selling? How much are they likely to buy and how often? How will you reach them? You need to be clear about who your customers are likely to be, or you’ll end up wasting a lot of time and money on ineffective marketing. Try to look at your business from your customers’ point of view: what do they need or want? You need to uncover what benefits they are seeking from your product or service and reveal ‘what’s in it for them’. Make sure you do your Market Research to flesh out the detail and create a customer profile.
- Competition: You also need to know who else is competing for your customers’ business, so that you can offer something better or different. Find out if anyone is offering similar products or services. What are they doing well and not so well? Think about the quality, price, convenience, presentation, after-sales service. What would you do differently and why? Are there any gaps in their offering? Any windows of opportunity? Look at the broader picture, using your Market Research data.
- Marketing: Once you’ve identified your potential customers and the competition for your business, it’s time to think about how you will make customers buy your product. In a nutshell, that’s what marketing is all about – persuading people to buy from you rather than from your competitors. You need to be clear on what makes your offer different? Can you define your "market niche" and "Unique Selling Points" – what makes you stand out from the crowd? Check out the tips on Marketing and Sales
- Communication: Once you know what you’re selling and who you want to sell it to, you need to consider how to let your potential customers know about you, and how to persuade them to buy from you. Targeted promotion is essential, to achieve maximum output with minimum financial output (ie maximise the return on your investment). Look into the methods you’ll use to reach your audience, including the different media formats available to you. To find out more about communicating your message effectively to the right people,check out our Public Relations tips.
- Commitment to Social Responsibility: Businesses are increasingly being asked to demonstrate their commitment to social responsibility. Therefore, you should include in your plans how you will manage and reduce your impact on the environment, invest and develop the skills of your employees and embed your business in the local community. To help plan your approach, find out how you can become Social and Environmentally Responsible.
- Legal issues: The secret to getting your business up and running as quickly and efficiently as possible is to keep it simple. All you need to do at the outset is register with the Inland Revenue and open a bank account. It’s that easy! Unless your business proposal is very complex or requires lots of investment, don’t worry about setting up a Limited Company. Instead you can register with the Inland Revenue as a Sole Trader. Obviously if you’re going into partnership with other people, you’ll want to consider a partnership agreement. These are fairly standard and any solicitor will be able to provide you with one. To explore other related Legal Issues you may want to consult the tips of our Legal Advisers.
- Operations and Infrastructure: Consider what facilities your business will need and how you will deliver your service or product to your customers. What IT or other equipment will you need? Will you need to employ staff, and what training and development will they need? How are you going to manage the business on a day-to-day basis? What insurance will you require to protect yourself and your business against potential claims? For more information on these areas, read our tips on Human Resources and Team Management and Leadership.
- Your Team: Who is behind your business? What are your skills, motivation and experience to make this business a success? List your operational team and your advisers to show the support you have behind you to make it happen.
- Financial planning: Having some financial estimates and planning financially are crucial elements of your business plan, especially if you are approaching investors. What overheads and other costs will you have? From property, salaries and stationery to stock, web connections and postage: consider all your expenses. Try to make a sensible prediction for how much money you’re going to make in each of your first three years in business. It may sound impossible to make detailed forecasts like this, but without them you don’t have a business plan! It’s unlikely that your forecasts will turn out to be completely accurate, but they’re vital for planning and monitoring your business. Consult our tips on Raising and Managing Finance for more guidance.
- Sources of Funding: Use your financial plan to identify how much financing you need and when you need it. Do a personal financial expenditure plan to estimate your living costs, and then anticipate what additional funding you need to get the first foundations of your business in place.
First, try the “Three F’s” – friends, family and foolhardies! Who do you know who might be able to support your venture? If you do borrow money from someone, make sure that you have a clear written agreement about payback periods, interest rates, and so on.
Secondly, explore whether you might be eligible for any kind of grant funding, or thirdly consider loan finance from your bank. You will need to have some security to set against the loan, however – usually your home, so think about this option very carefully. You can find grants and financiers in our Finance Section
Finally, if you need a significant amount of capital, you might be able to get the support of a “business angel” – a private investor who will offer financial assistance in return for a share of the business.
If it all seems a bit overwhelming, we can help you create a plan of action, to break it down into manageable chunks, with our Business Motivation Programme
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Plan HQ is an online Business Planning Tool on a Virtual Platform so it can be accessed by multple users in different locations, with the ability to monitor progress against goals set.
Biz Plans offer a range of resources for creating a well prepared business plan, including a business plan wizard and cash-flow wizard. www.bizplans.co.uk
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