- What is a business plan?
- Business plans are an essential for all businesses
- What you need to include in your business plan
- Tools and templates to get you started
If you’re looking to start a new business, one of the first things you should do is put together a business plan. Like with anything in life, you can save yourself a lot of stress and grey hairs down the track if you take the time to set goals, think things through properly and implement systems from the get-go.
What is a business plan?
In its simplest form, a business plan is a document – physical or digital – that explains the goals of a business, how it will achieve them and generally how it will function. A business plan can also contain essential information, such as organisational structure, key staff and your product or service offerings.
While typically just an internal document, a business plan can be very useful when trying to secure funding. Both potential investors and banks will be interested in seeing it when considering if they should invest in your business. So, it pays to have a plan in place.
Why is a business plan important?
Business plans can help you dig a little deeper and get a better understanding on different areas of your business. For example, it might help you understand how you’ll collect customer data or how to manage risks.
Another great reason why a business plan is a must-have is that it can help you refine how your business can make money. These plans give you the opportunity to conduct market research and identify gaps or work out what your value proposition truly is and how you can get an advantage over your competitors.
Filling out this document can also help you streamline other areas within your business, such as your finances and marketing. By having a holistic view of your business, you can make confident choices that are consistent with its values and direction.
What should you include in a business plan?
No two business plans are alike, but there are some things that all business plans should have, regardless of your business’ industry and type. As a starting point, we’re going to explain the different types of information that you might include in your business plan. You can also download our business plan template and follow along as we go through this list.
You need to describe the fundamentals of your business. Begin by asking yourself, "What industry am I in?" Answer this question with details about your products or services and the markets you intend to target.
Goals and objectives
Any business plan must have your business’ goals for the short-, medium- and long-term periods. These goals should be clearly and carefully defined and explain where your business intends to go and by when.
Objectives are the actual steps that your business will need to take to reach each goal. They tell you how to get where you want to go, helping your business focus on what matters. When writing your objectives, consider the different ways you will achieve your goals. What will you do? Who will be involved?
Identifying the risks your business might face, and how you manage those risks, is essential for any business plan. By including risk management into your business plan, you can adopt a consistent approach to managing risks as a business, and all staff understand what they need to do should a risk occur.
Price positioning and strategy
How are you going to position your product or service in the market? Will you price low and compete on price with the aim of selling large volumes, or will you position your goods as luxury items? Your customers will want to get what they pay for, so it is important to be consistent with your price positioning.
Core competitive advantage
A core competitive advantage will help your business differentiate its goods or services from those of your competition. Conduct competitor research and compare your business to your competitors – think about how your offering can stand out from the crowd.
Cash flow forecast
It's vital to have an idea of your financial liquidity over a certain time period, say 12 months. Get a plan underway with a cash flow forecast (xlsx) that outlines each month’s projected cash on hand, receipts, payments and overall cash balance.
Ensure that you include every item and consider seasonal changes in sales. In addition, plan multiple scenarios such as an optimistic sales forecast and a pessimistic sales forecast.
Market research should be a core component of your business plan. Whether you get customer feedback through a short survey or face-to-face focus group, quality research can help you understand what your target market wants and enjoys about your offerings.
Both primary research (surveys, interviews and speaking to customers) and secondary research (government statistics, trade publications and information that's already been gathered) can be useful for improving different areas of business, such as the product itself, product distribution and your marketing channels.
Now that you’ve conducted market research, you can use those findings to develop a comprehensive marketing strategy. You can determine which channels will work best for your product and market. For example, a fashion boutique targeted towards Gen Z might focus on social media and online marketing, whereas a professional services consultancy might focus more on local area marketing or networking events.
Ongoing development strategy
Your business plan may be most useful when establishing your business, but reviewing and improving your strategy as your business moves forward is just as important.
For your business to continue to develop and grow, you'll need to consistently check its foundations and structure while looking for areas that could do with a little refinement.
If you’re ready to start developing your own business plan, then you can download our Business plan template (PDF). Or you can download and our Growing your business checklist (PDF) as a starting point.
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