Writing a Business Plan: A Guide for Your Small Business
A succinct guide to plotting a course for your business
Every business needs a point to aim for, and to know how it’s getting there. Unless everyone involved knows precisely where and how the business is progressing, it can be very easy to fall off course. Plotting the direction of your business is the purpose of a business plan – a written outline of the strategy and initiatives needed to guide your business to its desired location.
This guide will help you understand what to consider when writing up a standard business plan. We cover what a business plan is used for, how you can use the three-pronged approach of vision, values and mission to effectively communicate what your business is about, and how you can break this down into achievable objectives for the short- and long-term.
What is the purpose of a business plan?
The main purpose of a business plan is to define the strategy and plan of action you have for the business over the next one to three years, as well as clearly defining the values and vision underpinning your business.
As business plans clarify your aims and objectives, you can use them to identify your business’ priorities, and to drop then non-priorities you are wasting your time on. Additionally, you can use them as a benchmark against which you can measure your performance through the period it covers.
Business plans can be invaluable for others, too. Inside your organisation, you can involve your employees in the planning process to foster a sense of community and give them an idea of what they’re working towards. Outside your business, they are an essential tool for giving investors or other interested third parties an overview of your business, its strategy, and what makes it so great.
How should I structure/write the plan?
There is no one way to write a business plan – use your judgement as to what works for your particular business and industry. However, we suggest setting it out along the following lines:
- Executive summary. This should be a one- or two-page document which essentially describes your USP (in other words, what makes your business uniquely different) to investors, lenders, prospective employees or anyone else. It will describe the market you operate in, your competitors, the management and personnel, and a summary of your financial performance over the last three years or so. It should also summarise where you expect to be in the future.
- Vision, Mission, and Values. These three statements should underpin every concrete step you make as a business; they are the bedrock of principles on which your company is founded.
- Business objectives and goals. With your vision, mission and values in mind, this section will outline how you plan to achieve your objectives as a business in the short, medium, and long-term.
- Business information. This is where you will put the empirical data about your business – the make-up of the executive team, detailed financial figures, your marketing and sales activity, and so on.
- A SWOT analysis. You might want to conclude with a sober assessment of where your business really stands using this objective method. You can find out how to carry out a SWOT analysis here.
We cover what to put in the relevant sections in more detail below.
More generally, when writing a business plan, always remember your audience. Write as if you were writing for an outside audience, even if you aren’t, as this will avoid internal bias and help you to clearly set out in your own mind what makes the business tick. Keep it short – nobody likes walls of text – be realistic about your plans and performance, and make it as professional-looking as possible.