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It should then function as a road map to follow as time progresses.

Far from being shoved into a bottom drawer or left languishing on a computer hard drive, it should be consulted and updated regularly - even to the point of being a frequent activity such as using the business’s accounting software to complete important internal and external paperwork.

Preparing to write a business plan

You should already have a clear idea of the market place you’re entering and why you’re there by answering the following questions:

•   What does your business exactly do?

•   Who are its target customers?

•   Why are you entering the marketplace?

The last question is clarifying exactly what the problem is, how you’ll solve it and why you’re different to what’s already available.

The answers to the first two questions should go at the beginning of your plan as an ‘overview’ or ‘executive summary’ of your business followed by the identification of the market’s ‘problem’ and your business’s solution under an ‘opportunity’ header.

Financial needs - if you require funding at the outset, or think you may do at a given point in the future, then include a section describing how much you’ll need and when.

Solution and execution - a section where you’ll discuss how you’re going to turn the opportunity you’ve identified into a viable business.

Here you’d discuss the following:

•   Marketing and sales - how you’ll bring your solution to your intended market

•   Operations - the infrastructure you’ll deploy to offer your service

•   Measuring success - how you will measure success against your objectives such as market penetration figures and revenue aspirations

Personnel - who you and your team are and what you bring to the table in terms of skills and experience.

If your business is already operational then a description of your location, history and structure would be included.

Plans within a plan

Within your overall business plan will be ‘other plans’ such as marketing and financial plans - the last more commonly known as a financial forecast.

Marketing plan - what will you do to inform your market as to what you offer? Is it a market already hungry for your solution or does it need educating as to the desirability of what you offer?

What is your market segment?

It’s not ‘everyone who uses an XYZ’ or ‘everyone who drives’. It’ll likely be a certain segment of a wider market so you need to show you know what this market wants, how it behaves, how large it is and whether those in it have the ability to buy what you’re offering.

You’ll also need to include some profiling of the type of customer to be found in this segment; their income levels, likes, dislikes, gender, age range and so forth.

What about pricing?

Will you base price on the cost to you plus a profit margin, on what the market will bear, or will you use value pricing - the value to your customer of, say, saving an hour or two of their time. If so, what’s their saved time worth?

What methods will you be using to reach and sell to your market?

Financial plan - if you intend to seek funding then lenders and investors will need to see a detailed financial forecast, so be realistic.

Generally, a financial forecast will include figures for the first 12 months and projections for the following three to maybe five years.

A revenue forecast would be subdivided as follows:

•   A sales forecast - how much you’ll sell over the periods concerned

•   A personnel plan - how much you’re paying on staff and their associated costs such as insurance 

•   A profit and loss statement - this is where all the finances come together to reveal the ‘bottom line’

The financial forecast will show if you’ll make a profit each month or lose money as you grow.

You’ll need other financial information such as a cash flow statement, profit and loss statement and a balance sheet.

Following your plan

Along with providing information to potential investors, your business plan is an active document to help you monitor how your business is progressing.

You may need to make changes to it as you go - it certainly shouldn’t be seen as something ‘cast in stone’ since things can change rapidly. That said, your plan should anchor you so you don’t constantly ‘rip things up and start again’. It’s the framework to build your business around – flexibility will help you stick to it, as will clarity when drawing it up in the first place.

Think of it as a blueprint by all means but don’t be afraid of using the red pen now and then.