Writing a business plan: here’s how to plan your venture

Pro­spect­ive en­tre­pren­eurs use a business plan to work out their business idea in writing and to document the planned im­ple­ment­a­tion. Using the business plan, you can verify how feasible your business idea is as early as possible. Ad­di­tion­ally, it takes on the role of a roadmap for the found­a­tion phase and often guides the newly-founded business through­out the following years. A business plan fulfills the following functions for pro­spect­ive en­tre­pren­eurs:

• As­sess­ment of feas­ib­il­ity and prof­it­ab­il­ity: In creating a business plan, you assess whether your business idea is at­tain­able. The goal of this as­sess­ment is to figure out the feas­ib­il­ity (is my idea ex­ecut­able?) and prof­it­ab­il­ity (is my idea fin­an­cially ad­vant­age­ous?).
• In­form­a­tion document: Potential sponsors such as investors, funding in­sti­tu­tions, and banks require a business plan. However, the business plan is also a sig­ni­fic­ant document for potential business partners.
• Roadmap: A business plan supports the founder before as well as after business creation by im­ple­ment­ing necessary tasks. The business plan acts as a road map, which notes future goals that require taking into account and planning for new de­vel­op­ments.

As a pro­spect­ive en­tre­pren­eur, you should create the business plan prin­cip­ally for your own benefit. Nev­er­the­less, you are generally dependent on the financial support of external in­sti­tu­tions when founding a business. Ac­cord­ingly, a business plan should aim to represent its start-up plans in a mean­ing­ful way. The following groups take the business plan’s en­tre­pren­eur­i­al template seriously and use it as a basis for making decisions:

• Business plan for investors and banks: Banks and investors use the business plan to decide whether to offer a credit.
• Business plan for business partners: Potential business partners are in­ter­ested in your business plan, as well, although the eval­u­ation of the business idea is paramount in this case.
• Business plan for the un­em­ploy­ment office: In the UK, you may be eligible for the New En­ter­prise Allowance to fin­an­cially support your newly­foun­ded business during it’s early years. A business plan is helpful when applying to take part in this program.

The pre­par­a­tion of a business plan rep­res­ents the first big challenge, es­pe­cially for new and un­ex­per­i­enced en­tre­pren­eurs. It is very time-intensive, but ul­ti­mately worth­while. There is no better way to prepare yourself for your upcoming self-employed status than intensely grappling with the in­tric­a­cies of your business idea. First and foremost, founders should decide whether they want to write a business plan them­selves or have it built by someone else.

Many founders decide to resort to templates and tools due to the com­plex­ity of a business plan and how time-intensive making one is. Searching online for sup­port­ive resources often results in being presented with countless free and fee-based offers. But how do templates and tools differ in terms of their usage, and what are the ad­vant­ages and dis­ad­vant­ages of creating a business plan yourself?

Business plan templates provide the user with an overall structure as well as ad­di­tion­al in­form­a­tion and tips for content-related re­quire­ments. The pre-prepared structure of the document and the available notes will make it possible for you to create your business plan quickly and with less effort than if you were doing it on your own. However, the templates in question are usually general templates that should be per­son­al­ized.

If you are a founder who is creating a business plan for the first time, we recommend that you use a tool. During the software-supported creation process, you will work through the struc­tur­al elements step by step and answer pre­de­ter­mined questions. Fur­ther­more, business plan tools utilise a plaus­ib­il­ity check, which detects possible in­con­sist­en­cies in your plan. With the aid of pre­fab­ric­ated wording templates, the tool will ul­ti­mately assist you in entering all of your entered data into a con­tinu­ous text.

Most available tools help you create the entire business plan, including your budget and liquidity plan, but vary in price. The Enloop web app is an example of a powerful, com­pre­hens­ive solution. With it, you can create one simple business plan for free, and more com­plic­ated ones by choosing from one of their different fee-based packages, the most expensive of which costs ap­prox­im­ately £30per month. Another example of com­pre­hens­ive business plan software is StratPad, which also allows you to complete one business plan for free, in addition to various fee-based options, of which an annual payment of ap­prox­im­ately £130 is the most expensive.

A pro­fes­sion­al business plan is es­pe­cially sig­ni­fic­ant for potential sponsors, investors, and lenders. Often, the first im­pres­sion de­term­ines whether or not financial as­sist­ance is given. Con­sequently, founders can lower their risk of a rejection by working together with an external spe­cial­ist. Besides the complete creation of your business plan by experts, there is also the option have a self-created business plan proofread or to simply have a part of it replaced.

Countless man­age­ment and tax con­sult­ants are trained in creating business plans. Founders profit from the ex­per­i­ence and know-how of these experts. The pro­fes­sion­als are trained to avoid common mistakes and identify possible weak­nesses in the business idea. Even though the actual creation is handled by the pro­fes­sion­als, a suc­cess­ful business plan requires close co­oper­a­tion with the founder during this process. The founder supplies not only content-related in­form­a­tion, but is also actively involved in important decisions and de­vel­op­ments. In the end, the founder should fully un­der­stand their own business plan and be able to convey its contents to possible lenders in a com­pre­hens­ible way.

Whilst there are already many free templates and tools available online, working with an external expert is tied to high prices. The offers available on the internet vary widely and are dependent on in­di­vidu­al factors, like your objective and business idea. If you want to apply for a founder credit or other financial as­sist­ance, the stakes for having a high-quality business plan are sig­ni­fic­antly higher, which requires putting more effort into its creation. This is also the case when your business idea entails a new and ex­traordin­ary concept that ne­ces­sit­ates a com­pre­hens­ive ex­plan­a­tion.

The price of having a business plan created for you starts at an average of £1,000 if you choose to seek a con­sult­ing firm’s help, and ranges anywhere from £2,000 to £35,000 if you hire a private con­sult­ant. The exact price depends on the com­plex­ity of the business plan, amongst other factors. Con­sid­er­ing the scope of the project and the size of the desired credit, you can make sense of it and compare prices. Exercise caution with ex­cep­tion­ally af­ford­able offers, as these are usually not trust­worthy. How long it takes to create is also dependent on the scope of the business plan, and can vary widely.

If you know how to write a business plan and choose to do so, you get to determine its content, com­pos­i­tion, and form on your own. However, if you don’t yet have any ex­per­i­ence with the creation process, a factor as small as creating the structure can be difficult. Experts, on the other hand, know exactly what a strong structure looks like, which parts of the content are crucial, and which formal aspects must be taken into account.

There are currently no in­ter­na­tion­ally stand­ard­ised guidelines for the content, com­pos­i­tion, or form of a business plan. Nev­er­the­less, it is possible to determine elements that are found in every good business plan. We advise you to take the following points into account when drafting:

• Executive summary: summary of the business plan
• Company de­scrip­tion: unique selling point, goals, products and services, customer benefits
• Founder profile: expertise, ex­per­i­ences, lead­er­ship qualities
• Market analysis: industry, com­pet­i­tion
• Target group: customers, customer segments
• Strategy and im­ple­ment­a­tion: proposal, price, sales, ad­vert­ising, marketing budget
• Company or­gan­iz­a­tion: legal structure, or­gan­iz­a­tion, man­age­ment team, de­part­ments and employees
• SWOT analysis: strengths, weak­nesses, op­por­tun­it­ies, threats
• Financial plan and pro­jec­tions: capital re­quire­ments, financing model, repayment schedule, interest schedule, cash flow statement, operating costs plan, sales plan, gross proceeds cal­cu­la­tion, viability plan, minimum sales cal­cu­la­tion, liquidity plan

Decisions about the sequence and pri­or­it­isa­tion of your points should be made based on the nature of your business. A business model with never-before-seen products or services, for example, requires a more com­pre­hens­ive de­scrip­tion of the business idea than a model that is based on es­tab­lished concepts. With an es­tab­lished business model, on the other hand, you should precisely depict how your idea differs from its com­pet­i­tion.

It is not only the content of a business plan that needs to be con­vin­cing, but also its com­pos­i­tion and form. The content of a suc­cess­ful business plan is com­pre­hens­ibly and logically struc­tured. A re­cog­nis­able structure il­lus­trates a thought­ful approach when creating a business plan, and therefore a well-prepared found­a­tion. However, the final document should usually be a maximum of 50 pages for basic plans and a maximum of 100 pages for more complex ones. The com­plex­ity of your business plan is ul­ti­mately de­term­ined by factors like the scope of the business idea and the in­form­a­tion that needs to be conveyed.

Making the content concrete is just one of the five tips that we want to send you on your way with. Here are the others:

• Make your content concise: Formulate the content of your business plan with as much precision as possible, and avoid un­ne­ces­sary filler words. Potential investors want to find out the relevant in­form­a­tion quickly and easily.
• Set yourself apart from the com­pet­i­tion: The more skill­fully you dif­fer­en­ti­ate your product or service from its com­pet­i­tion, the more success your pro­spect­ive business creation promises.
• Be realistic: To be able to take on real chal­lenges and op­por­tun­it­ies, it is important that your business plan is written ob­ject­ively.
• Take advantage of visual tools: Use graphics, diagrams, and images to il­lus­trate your idea. That being said, be careful to only use these visual tools at mean­ing­ful points and in mod­er­a­tion.

Please note the legal dis­claim­er relating to this article.