Creating a business plan helps you define your goals, and forecasting makes it easier to plan the best route to achieve them. Find out about forecasting strategies, and learn how to create a business plan that works...
If you need money to get your business started, or if your business needs cash for expansion, you will need a business plan. Having a well-thought-out business plan can attract investment and help you develop a long-term strategy for your company.
What makes a good business plan?
To be successful, your business plan must answer the following questions:
- Why does the business exist?
- Where does the business want to go?
- How will it get there?
- What will it cost?
The clearer you are in answering these four questions, the more convincing your business plan will be. You should back your answers up with logical arguments, justifying any forecasts or claims with careful reasoning and research.
Always take into account who the business plan is intended for. You may even want to create more than one version to cater for different audiences.
Outlining your purpose
Your business doesn’t exist simply to make money. A mission statement is an essential part of your business plan. It doesn’t need to be longer than a few sentences, but it should clearly state what your business offers.
Creating objectives
The second area you need to cover in your business plan is your objectives. These include your financial, strategic, operational and marketing goals.
When stating your objectives, make sure they are SMART:
- specific
- measurable
- actionable
- realistic
- timeable
Forming a strategy
Your business plan needs to show that you understand your potential market and how to take advantage of the opportunities it presents.
Researching potential customers and competitors will help you better understand the market conditions. You can then perform a SWOT analysis – examining your business’s:
- Strengths
- Weaknesses
- Opportunities
- Threats
From this you can develop a Unique Selling Proposition (USP) that answers the following questions:
- Who are my potential customers?
- How will I get them to buy from me and not my competitors?
- How will I produce and deliver my product or service?
Drawing up a budget
A budget is an essential part of your business plan, especially if you are trying to take out a loan or find an investor. Learn how to draw up a budget.
Purpose, objectives, strategy and budget are the key elements that form a successful business plan. For more details on what to include in your plan, see Business Link’s guide to planning.
Forecasting sales
Having an accurate estimate of your future sales by month can help you to:
- forecast turnover and profits for your business plan
- avoid cashflow shortages
- manage your production and staff.
Most businesses base their forecasts on sales during the previous year, but if you are just starting out you will need to conduct some market research.
To create your forecast, you will want to adjust your previous sales figures to account for factors that may affect your sales, such as:
- changes in the market
- the size of your sales force and marketing budget
- changes in your pricing
- new product launches.
If your business has major clients, consider asking them about their future purchasing plans to help you refine your sales forecast.
Develop your business with a sales plan
Your sales forecast may reveal some potential opportunities as well as situations you may want to avoid. Developing a sales plan will help you to take advantage of opportunities and avoid pitfalls.
Your sales plan should outline:
- what sales opportunities you want to focus on
- changes you want to make in your sales patterns
- what actions you can take to achieve your sales goals.
How uSwitch for business can help
Read our guide to budgeting for small businesses