A business plan is a written document that summarises these points about your business:
- Where the business has come from (even a start-up has some history)
- Where it is now
- Where it is going in the future
- How it intends to get there
- How much money and other resources it needs to fulfil its plans
- What makes it likely to succeed
- What threats or disadvantages must be overcome on the way to success
Like a Curriculum Vitae that you write when applying for a job, business plans tend to have a broadly similar structure, regardless of the type or size of the business they describe. Typically, a business plan includes these sections:
Executive Summary: A single page that encourages further reading
Introduction: Basic information about the business and the purpose of the plan
Promoter(s): Who you (and your team) are and your qualifications for starting and running the business
Project Overview: A description of the business, its mission statement, trends in its industry, targets, employment (actual and potential) and the legal status of the business (often this section is combined with the Introduction)
Marketing: A summary of your marketing plan, backed up by a market overview, details of your customers, competition, products/services, price, distribution and promotion strategies, leading to a sales forecast
Operations: Your products or services in more detail, how they are made and delivered, how you will make sure of quality, what staff you will need and how they will be organised
Finance & Funding: A summary of your financial projections, with your funding requirement (and your own contribution) highlighted
Appendices: Including detailed financial projections and any other relevant information
This format is shown in the business plan template.
Most business plans are written as part of the application process for funding – to an investor, a bank or a grant agency. They should be capable of being understood without any further input from you – and therefore must contain all the information that the reader might require to come to the right decision (to give you what you are asking for). But business plan readers are strong believers in the principle of ‘less is more’: they don’t want 100-page business plans; 12 to 20 pages, depending on the type of business and amount of funding sought, is usually sufficient. Of this, the Executive Summary is the most important, since whether it engages the reader largely determines how much further (if at all), they read.
A key element of your business plan for anyone who reads it is the set of assumptions that underpin your financial projections. Knowing and listing your assumptions gives the reader a basis for challenging your projections in a constructive manner.
For example, in relation to staff salaries, you might project costs of €162,270 for, say, year 3. In arriving at this figure, based on your expected level of activity, you have assumed that:
- You will need five staff
- Two of the staff will be full-time, paid €36,000 pa each
- The other three will be part-time and paid on average €12,000 pa each
- You will pay yourself €45,000 pa
- Employer’s PRSI is calculated at the current rate of 10.75% on the higher salaries, at 4.25% on the lower salaries, with no PRSI due on your own
If you explain this in your business plan, in the Employment sub-section of the “Operations” section, a reader of your business plan can assess whether, in their view:
- Six people (five staff plus you) can handle the work involved in your projected level of activity
- The balance of responsibility between the six people appears sensible
- The salaries are reasonable, in the light of the reader’s own experience and market conditions
And when they come with questions, have your answers ready in your working papers. For example, you should be able to show an inquiring reader:
- Your production process and how you arrived at the number of jobs
- How you arrived at the responsibilities of the individual jobs (with copies of job descriptions)
- How you arrived at the salaries for each job (copies of salary surveys)
Share the confidence that comes from thorough research with your readers. Your working papers also provide an essential reality check – the more your working papers can answer the questions posed in the Evidence & Your Working Papers exercise, the better your chances of business success.
Even if you don’t need to raise funding for your start-up, write a business plan to guide you through the early stages of being in business – the planning exercise alone will give you insights into your market and business that you otherwise would miss.