How to write a business plan

What is a business plan?

A business plan is a document that outlines the key aims and goals of the business and how you’re going to achieve these. Outlining the marketing strategies, financial projections, and operational plans. This should entail key measurements of success and how you’re going to achieve these.

But it shouldn’t be a document you write and throw away in the draw letting it get dusty. A business plan is a living breathing document that can help keep you on track; it’s the foundation for you to create a sustainable, profitable business.

Business plans usually come in two forms, Traditional and Lean. A traditional business plan is detailed and comprehensive. Writing in-depth for each section to fully understand you and your business. A bank or investor may want to see this to evaluate your business. A lean business plan is simply a watered-down version of the full plan. It still contains all the vital information for your business, but it is much quicker to write and can get you started.

Financial statements

The final and potentially most crucial section of your business plan is the financial section. This section outlines the financial position of your business in its current state or with future projections if you haven’t started yet.

The level of detail needed will vary depending on the audience this is for, but you’ll want to include three primary areas: Income Statement, balance sheet and cash-flow forecast.

Income statement

This is exactly what it sounds like, outline the revenue sources and expenses over a given period. Including income generated by your business, cost of goods, gross profit margin, operating costs, net profit before and after taxes, and total expenses.

Cashflow forecast

A cashflow forecast or statement outlines when you will receive money and when you will pay any debtors. Allowing you to have an overview of when you will be paid and when you need to pay, ensuring you always have money to cover any shortfall. It should include information as sales, receivables, total income, marketing, and all overheads.

Balance sheet

A balance sheet describes the amount of assets, liabilities, and equity in the business

Assets – short term assets such as cash, inventory, or long-term assets such as property
Liabilities – Current debts such as accounts payable and taxes and long-term such as a mortgage
Equity – This is the difference between your total assets and total liabilities, this can be important for investors to evaluate your company.