This article is for educational purposes and does not constitute legal, financial, or tax advice. For specific advice applicable to your business, please contact a professional.

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The early days of setting up your business are some of the most exciting. Everything is ahead of you, and all your ideas are fresh and front of mind. You’ve got the passion and the vision, now you need the planning.

A business plan is a blueprint for how you’ll start, run and grow your business. It gathers and organises all your ambitions, and helps you prepare for the journey by taking a good look at what’s needed.

So how should you go about creating a business plan? There’s no one-size-fits-all approach. Some companies follow a standard formula, whilst others pick and mix the elements to create a business plan that feels truer to their brand and ambitions.

Why create a business plan?

To create a business plan that’s truly worthwhile, there are a few things to consider before you jump into the writing. The first is: why do it at all? And the answer lies in who you’re building a business plan for. In most cases it’s a document for you and your partners or employees, helping you focus, prioritise and plan — it’s there to keep you on track for growth. Business planning can also be for potential investors, acting as a funding pitch. With these two audiences in mind, your business plan is designed to:

• Explain your goals for the next 1 to 3 years and how you’ll achieve them
• Prioritise and shed unnecessary resource, energy and ideas early on
• Create a benchmark for you and others to follow
• Raise investment
• Attract new people to your management team

What to include when building a business plan

With a clear idea and purpose, it’s time to start writing. We’ve come up with a basic framework to help you create a business plan from scratch. You can then build out more complexity and add sections as your vision develops in the coming months.

The key elements to include when building a business plan are:

Executive summary

The executive summary is a high level description of your business and how you’re going to accomplish your goals. As the opener to your business plan, it should create a memorable first impression. All the points you make in subsequent sections of your business plan follow on from this one, so you may find yourself revisiting it more than once.

What to include:

• A brief, attention-grabbing summary of key points from the sections that follow.

Business description

If a stranger asked you to describe your company on the spot, what would you say? The business description is the section of your business plan that deals with the core questions about what your company is, how it’s run and what it does.

What to include:

• Your company name
• The business structure
• Your location
• The goods or services you offer
• A brief summary of your audience and competition
• Your mission statement

Market analysis

This is the section of your business plan that clearly identifies your target market: who you’re going after and why. What you’re really trying to prove is that nobody can fill the gap in the market better than you. As an analysis, it’s necessary to do some research into the market and potential customers to justify your explanations.

What to include:

• A detailed persona of your target customer
• An explanation of how your products or services meet their needs
• An outline of your plans to respond to current and future demand

Competitor analysis

This section of your business plan reveals the challenges your competitors pose and outlines how you’ll thrive in the market next to them. As with the market analysis, include solid facts that back up every claim you make. The more you know about your competitors, the stronger you’ll be able to contend.

Learn more about how to conduct an in depth competitor analysis for your business in our guide.

What to include:

• The markets your competitors are in
• What benefits they offer
• Why people buy from them
• A detailed analysis of what they sell and for how much
• Your competitive advantage (how you intend to successfully compete)

Services and product lines

When building a business plan, use this section to detail the types of services or products you intend to offer in depth

What to include:

• A list (with descriptions) of your current and future products/services and ranges
• Details of any copyrights, developments and manufacturing

Operations and management plan

This section looks at your plan to get off the ground and manage day-to-day operations whilst keeping a healthy bottom line.

What to include:

• A description of your facilities and equipment
• Your employee structure and training plan
• Inventory requirements
• Supplier relationships
• The costs of these and how you plan to cover them

Financial considerations

This section of you business planning document analyses the capital needed to get you off the ground and keep you afloat. It’s one of the most detail-focused sections of the business plan. Depending on how early you are in the setup of your business, you’ll have more or less to include.

What to include:

• Startup costs
• Running costs
• Details of any existing capital
• A break-even analysis
• Sales forecasts
• Balance sheets
• Cash flow statements

Funding request

Most small businesses need a bit of a financial boost during their early years, and this section of the business plan pitches for that funding. It’s important to get the numbers right to maintain your integrity and win trust from banks or investors. Tweak this section each time you approach a financial source to keep it relevant.

What to include:

• A recap on your business (be sure to pick out the most lucrative points)
• A summary of your existing financial situation
• How much funding you need and why
• How the funding will be used
• How you plan to pay the money back and when

Make the most of business plan templates

When creating a business plan, it can be daunting staring at a blank page before you get started. There are structured template documents available to download online which should help you get going.

For example, the Prince’s Trust offers a free government-approved business planning template, with pointers on which details to include in each section. It’s particularly useful in pinpointing your target customers, the strengths and weaknesses of your competitors, and the estimated costs your business is likely to encounter.

Using a structured template can help you maintain your focus as you create a business plan, stopping you from going off-piste and keeping each section succinct. Writing into the tables provided can also ensure any financial figures are clearly displayed.

Develop a marketing and sales strategy

A written business planning document isn’t the only thing you’ll need when mapping out your future growth. A detailed sales and marketing plan can also spread word of your products and attract customers.

What is your pricing strategy?

First, think hard about your pricing. Potential customers will simply ignore you if your pricing is too high compared with rival products. On the flip side, selling too low will quickly eat into your profit.

There’s no one-size-fits-all pricing strategy. You’ll likely need to combine a range of approaches to attract new sales – and keep customers coming back.

These include full-cost pricing, loss leaders, and a ‘freemium’ model where you charge a premium for add-ons.

Whichever you adopt, always keep in mind the following when setting a pricing strategy:

• How much it costs to make or source your products
• The value of your services to clients
• Your target customers – and how much they’re likely to spend
• Your overall running costs
• Short-term critical costs like loans
• Competitor pricing

How should you promote your product or service?

Once your products and services are ready to go – and their pricing is set – it’s time to spread the word. Consider the following tips when putting together your marketing plan.

Don’t put all your eggs in one basket

Gone are the days when you could simply launch a basic website, hand out leaflets and expect customers to roll in. With heated competition on the web and from bricks-and-mortar stores, you’ll need a joined-up marketing plan to keep pace.

Free social media tools, email newsletters, promotional vouchers and an interactive website are a good starting point when you first enter the world of business. As you expand, you can then start to invest more in sophisticated omnichannel marketing. This joins the dots between different parts of your business using tools like click-and-collect services and price comparison apps.

Boost your social media presence

Use free social media platforms like Facebook, Instagram and Twitter to share high-quality images and videos promoting your products. Post engaging blogs and guides on things your customers have a genuine interest in. And don’t be scared to speak to your customers directly – quickly responding to any feedback, whether it’s positive or negative.

Start small with paid promotions

Hiring a PR firm or investing in pay-per-click marketing may seem like a quick win to get customers on board. However, the costs of such campaigns might swiftly add up and impact your profit margins. Start small with paid advertising campaigns and always do your research before signing any contracts.

Which sales channels will help you reach customers?

As a final step, consider the sales channels you have available to reach new customers. Depending on what you’re selling, this could simply involve physical channels – such as a bricks-and-mortar shop or a door-to-door sales team. Take a close look at the physical sales channels your competitors use – is there anything you can improve on?

Even if you’re committed to having a high street presence, you can’t ignore the importance of online sales. Think about creating an omnichannel sales strategy – linking up your physical store with a website and even apps to deliver a seamless customer experience.

Services like Square can help you set up a free online store and develop a delivery network. Online checkout tools can also smooth any fears you may have about accepting payments over the internet.

Final tips to create a business plan

When you’ve finally digested everything above and feel ready to tackle your business plan, follow these final best practice pointers:

• Use succinct and straightforward language
• Limit the length to 15 to 25 sheets of A4
• Break the business plan down into clear sections
• Make the formatting slick and legible
• Include graphs, tables and other relevant visuals

The benefits of business planning

With so many things to consider – and so much excitement – when starting a business, you can easily lose focus, and jump into different markets or contracts without properly considering if they’re right for you.

Creating a business plan, and a detailed marketing and sales strategy, makes you consider the practicalities of running a company and any challenges that await. Doing that will help you achieve your goals in a structured, logical way.