Writing a business plan: 5 things you need to know
Read time : 5 mins Added : 09/11/2023
A compelling and comprehensive business plan is an important asset for any business. It helps you to understand where you are now and where you want to be - then sets out how you intend to get there. If you need funding for your business, a detailed business plan can help give lenders or investors the confidence to invest.
Why you should write a business plan?
Writing a business plan forces you to explore your business idea in detail and identify what you need to do to make it happen. In addition, it will quickly show any flaws or potential stumbling blocks, allowing you to make mistakes on paper rather than in your actual business.
A well-thought-out business plan will:
- set a direction for the business and help you create an action plan
- help you and your staff focus on what's important
- show your commitment to banks, investors, colleagues and employees
- help you to spot problems early on and tackle them effectively
- set targets and evaluate your success
- help you attract better-qualified staff
Business planning isn't just for when you're setting up – you should keep reviewing and updating your plan regularly. A plan is always a useful asset for persuading others to invest time, money and effort in your business, and keep your plans on track.
What to include in your business plan
There are some key elements of a business plan:
Executive summary
While this comes first, you should write it last. It’s a concise summary of all the key information in the full plan and is your elevator pitch on paper.
Mission statement
What is the purpose of your business – what problem are you aiming to solve for customers? You need to outline what you want your business to achieve, apart from making a profit.
Objectives
How do you want your business to be performing in a year, and five years? You need to define your measures of success, making sure they are SMART.
S.M.A.R.T Objectives
Objectives should meet each of these criteria:
Specific
Outline clearly what is required in a simple statement.
Measurable
Include some type of metric that will enable you to monitor progress and know when the objective has been achieved.
Achievable
The objective should be challenging, yet grounded in business reality.
Relevant
The focus should be on achieving the outcome, not the means of doing so.
Time-Bound
There should be a target date by which the objective must be achieved.
Your strategy
Your strategy outlines how you intend to achieve your objectives. It details both the environment you’re operating in, and how you operate in it.
It’s vital that you understand who your potential customers are, and what they want. Alongside that, you should research who your competitors are - not just businesses that do the same as you, but those that meet your customers needs in a different way too (indirect competitors). Our Understanding your market guide has more information.
You also need to be aware of the external opportunities and threats for your business. Economic conditions, changes in legislation and new technologies can all have an impact on your business. You should identify any which are relevant to your business and outline how you will respond to them.
Business customers have access to Business KnowledgeBox as part of Internet Banking, which contains guides to setting up and running over 500 types of business and includes key market trends and issues, and trading and compliance considerations.
Our customers also have access to the Bank of Scotland International Trade Portal which provides a gateway to explore international trade opportunities and detailed market information.
You’ll also need to outline how you’ll operate including:
- Who your suppliers will be
- The staff, facilities and equipment you’ll need
- How you’ll promote your product or service.
Your Budget
Financial forecasts will help you, as well as potential lenders or investors, to understand if you have a viable business. You should provide details of your financial forecasts – how much you’ll sell and what the costs will be. Outline where the start-up funds will come from, and at what point you’ll need further investment for growth.
Key figures you need to capture are:
- Sales forecasts
- Costs and overheads – staff, facility, energy
- Assets – any significant company property
- Investments, loans and grants
A breakdown of costs, including tables detailing:
- Start-up costs
- Projected cash flow
- Projected profit and loss
- Projected balance sheet
You’ll also need to outline how you’ll operate including:
- Who your suppliers will be
- The staff, facilities and equipment you’ll need
- How you’ll promote your product or service
You can also find more information and a range of business plan templates and examples at www.gov.uk.