How to write a business plan

Your business plan isn’t just a formality, it’s a template for success.

It’s a place for you to set out your strategy and objectives, then break them down into concrete tasks and clear goals. Get it right, and it will pay dividends. One study even found that businesses with a plan in place were almost twice as likely to achieve their goals.

Whether you’re writing a business plan for the first time or revising your existing plan to fit your growing company, it’s essential that you see the process as an opportunity.

Here’s AXA’s tips on how to write a business plan.

Before you get started, take the time to consider what you want from your business plan.

While the ultimate aim is to set out your company's strategy and objectives, the process of writing a detailed plan can also help you stay focused and develop ideas. So be prepared to refine, evolve and adapt your ideas as you write.

With that in mind, why not:

• Start with some free-form notes. Get those ideas out of your head and onto paper. It takes the pressure off and gives you something to work with.
• Keep it simple. Once you’ve got the ideas down on paper, don’t feel they all need to get into the final draft. You don’t want to overcomplicate things.
• Break it down. If you do find you have more to say, you can always consider creating separate, detailed documents and just summarising them in your business plan.
• Grow it organically. You won’t write a perfect plan from start to finish in one go. Be prepared to skip between sections as you refine and rework your document.

Most business plan templates adopt a standard layout. This is what your lenders and investors will expect to see, so you should at least begin with these basics before considering whether to adapt it to reflect the unique circumstances of your business. 

 

1. Executive summary

A clear, punchy overview of your business that leaves readers hungry to learn more.

This section is vital because busy readers will use it to decide whether they should bother delving into the detail. Although the summary sits at the front of the document, you should save writing it until after you’ve completed the rest of your business plan.

 

2. Opportunity

A full description of the demand your business will serve.

Start with a detailed description of the product or service your business provides, before explaining where it sits within the industry and why you are targeting this niche. Take the time to understand your customers so that you can be clear about the problem you’re solving for your market. But remember to include enough context so that even a reader with no knowledge of your industry can grasp your ideas.

 

3. Execution

A breakdown of how you’ll make the business a success.

Briefly introduce your business goals and how you’ll measure them, before diving into the detail. Next, explain how your business is funded, and how that money will be spent. That means providing all the essential information about the day-to-day running costs of your business, but also the ‘big picture’ elements like your sales, marketing and logistics strategies. It's essential that you back these sections up with concrete data, as it shows you’re well informed and are making decisions based on real evidence.

 

4. Financial plan

No business plan is complete without a financial forecast to give readers ‘the bottom line’.

Typically this section includes monthly projections for first 12 months of operation, followed by annual projections for the next 3 to 5 years. It’s normally broken down as follows:

• Profit and loss statement (or income statement). The headline figures everyone will look at, these should summarise all of your income and outgoings to calculate net profit.
• Cashflow statement. This lists the money you have in the bank at any given time. It shows your liquidity, which is in indicator of your ability to cope with delayed payments or slow spells.
• Balance sheet. The place where you list your company assets, liabilities and the owners’ equity. This is then used to calculate the net worth of the business.

 

5. Appendix

Accompanying documents and detailed data.

Supply the detail behind the big picture strategies you’ve discussed in an appendix. This section could include the patents for your product, survey data you’ve used for your marketing approach or proof of ownership of specific assets. In short, include essentials that are needed to show you are on top of the details, but which would bog down the more descriptive earlier sections.

Before you sit down to write your first business plan (or if you are revising and editing an existing one), keep these tips in mind:

1. Keep it short. No one wants to read a 100-page business plan. Not even you. And this should be a tool you regularly refer back to, which is much easier when it’s concise.

2. Consider who is reading it. The chances are you’re writing for a mixed audience of financiers, investors and business associates. Ensure everyone can understand it by avoiding industry jargon where possible (and explaining terms clearly when it’s unavoidable).

3. Use the appendix. If you think something is essential to understanding your goals or strategy, include it in the appendix and link to it in the relevant section. That way you share the evidence behind your thinking, without disrupting the flow of your business plan.

4. Don’t stress! Writing your business plan isn’t like an exam, so you can always edit and adapt it. In fact, your business plan should be constantly evolving with your business, so there’s no need to feel like your words are set in stone.

There are two common responses to writing a business plan. The first is that you’re bubbling over with ideas and can’t fit them all in. The second is that you need to do more research and could do with space and time to expand on the details. In both cases it’s an idea to produce additional documents which will serve you well in the long term. These may include:

• A SWOT analysis. A SWOT analysis is a breakdown of the strengths, weaknesses, opportunities and threats to your business, which helps you pinpoint your niche and refine your strategies.
• Personal survival budget. A spreadsheet that gives you an overview of how much money you need each month to cover your personal outgoings.
• Risk analysis. That could be a new product, change in customer demand or surprising international growth. Whatever you’re worried about, the likelihood of it happening and the impact you should prepare for.
• Plan B (plus C and D). Even the best laid plans can go awry, so it’s important to plan for the unexpected. Detail some alternative ideas you could turn to if any of those risks turn into realities.

By now you should have a good idea about what your business plan should look like, but that’s just one part of getting your business off the ground and planning for success.