How do I form a business plan?

Attract investors and gain clear direction and business ideals

You have nothing to lose by creating a well thought-out business plan. Even if you don't require external investment, knowing your business goals, profit expectations, and anticipating costs is a wise decision. Unexpected costs are one of the main reasons that new businesses fail in their first year. Making a business plan can help you factor all of these into consideration, and help you avoid many of the early pitfalls of starting a business.

What should I have in my business plan?

And then, a well-presented business plan is vital for attracting investment. Ideally, your business plan should be formed from a mission statement and overall goals, and your financial analysis, where the costs and incomings can be estimated with some evidence of research and consideration.

Business descriptions

Showing investors (and reminding yourself) what your business is about should be one of the primary objectives of your business plan. If you can present this in an attractive and enticing manner then this gives your business plan a great head-start. There are many tools and examples online to help your business plan look beautiful.

The content too, where you can expand from the initial ‘elevator pitch' and mission statement, onto more detailed ideals discussing the core company values and how it is organised, is all important. Showing investors why your company exists, beyond just the numbers, will give your company authenticity and direction, and give investors confidence in your vision.

Financial analysis

To demonstrate that your business idea will work, your business plan needs to include a financial breakdown and cash forecast. This will include a breakdown of start-up costs, such as office rent, equipment purchase, initial employee salaries, and costs of acquiring necessary accreditation and permissions. With this in mind you will be able to calculate your initial start-up costs, and begin to consider how to fund them.

You should also factor in the expected incomes from sales (and potential costs associated with each sale), to calculate expected revenues, and calculate how many sales your business will need to make in a given time period to break even. The break-even point is a vital part of early business strategy, and assessing how viable this is will be the deciding factor for many investors, if you need to obtain funding.

Marketing strategy

Knowledge of the market is vital before you embark on your business venture. If no one wants what you have to offer, that's obviously not ideal. However if no one wants what you have to offer and you aren't aware of this, that's a recipe for disaster.

Ideally, knowing who your ideal customer is, how you can reach them, and how much they want what you have to offer, is information you will know already. If not, there are now thousands of places online where you can obtain this information, and make an informed judgement of how many customers you can serve with your business.

Presenting your marketing ideas in a clear and concise manner on your business plan will also help encourage investors, as well as funnelling your ideas towards serving your clients, and providing a marketable service.