How to create an effective business plan

Creating a business plan is an important and valuable exercise

It is essential to have a realistic, working business plan when you’re starting up a business. It has many functions, from securing external funding to measuring success within your business.

Whether or not you’re planning to raise funds, the process will raise useful questions and help you to both plan your strategy and structure your business effectively.

Your plan should include:

Executive summary

This is an overview of the plan, which sets out the key elements of the business and proposal. The headings in the executive summary will generally mirror those of the plan itself. Executive summaries are often non-confidential, where as a full business plan may contain confidential information and would only be supplied once a non-disclosure agreement has been signed by the recipient.

Overview of the business

Describe the business, including its products or services, location, a little history, why it was started, the purpose of the business and its key objectives.

About your market

Detail how things have changed or are changing in the market you supply. What are the key factors which are relevant? How will things change going forward? Focus on:

  • the products/services and operations
  • the competition
  • marketing and sales
  • intellectual property overview
  • risks

Management team

Outline your management structure, managers’ relevant experience to your business and their roles and responsibilities.

Financial forecasts

Headline figures should be included in table form for at least three years showing:

  • revenue
  • gross profit
  • net profit before tax
  • maximum cash requirement

Exit strategy

An investor will want to know where your business is going and what you plan to do in the future. If you plan to sell the business, also comment on a likely valuation.