Learning how to write a business plan before you dive right in and start (potentially) making mistakes is a smart move. Whether you need it for formal reasons – perhaps for trying to secure an investment – or not, a business plan will help you to consolidate your thinking, set clear goals and keep moving in the right direction.
There’s no doubt that it’s a big job and one that you might find daunting, but without a solid plan in place, you run the risk of failing before you even really get started.
Thankfully, this step by step guide will walk you through the whole process, teaching you how to write a business plan that sets you up for success.
How to write a business plan
1. Conduct market research
The very first - and arguably most important - step in writing your business plan is getting to know your market and your target customers.
Market research is defined as “the action or activity of gathering information about consumers’ needs and preferences.”
Without it, you stand little to no chance of developing a proposal that will appeal to the right people.
There are two main types of research – quantitative and qualitative. The first deals with numbers and typically comes from surveys and questionnaires. The second comes from both questionnaires and talking with people - either one on one or in focus groups.
If you’re on a tight budget, you can look to existing surveys and reports whilst also carrying out your own DIY-style research (this might include interviewing target customers and/or observing their behaviours).
2. Know and understand your competitors
From learning from competitors’ mistakes to understanding trends and identifying market gaps, conducting a competitor analysis can give you a distinct advantage.
In looking at your competitors, try to answer the following questions:
- What services do they offer?
- What are they doing well?
- How could they improve?
- How do they market themselves?
- Who are their customers?
- How do their customers see them?
If your focus is online, Kissmetrics’ lists your ultimate toolkit in its post ‘25 Sneaky Online Tools and Gadgets to Help You Spy on Your Competitors’.
Whilst we certainly recommend competitor research, beware of falling into the trap of following every move your competitors make. Your main focus should always be on your own business and what you can do to improve.
As Henry Ford, founder of the Ford Motor Company famously said:
“The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.”
3. Perform a SWOT analysis
A SWOT analysis (or matrix) is a method used to help determine the Strengths, Weaknesses, Opportunities, and Threats in any given business, project or situation.
Use a table like the one below to categorise what you learned during your market and competitor research, as well as your knowledge of your own business.
Once you have a good understanding of what’s helpful to your business and what’s harmful, you can start to put some strategies in place.
It can be useful to work through the following steps in relation to your SWOT results:
- How will your strengths help you to take advantage of opportunities?
- How will you overcome your weaknesses in order to take advantage of opportunities?
- How will you use your strengths to hold off or disable threats?
- How will you overcome your weaknesses in order to hold off or disable threats?
4. Define your services/products
Now that you have a good understanding of your customers, your competitors and your business itself, it’s time define your services and/or products.
- What will you offer and how will you price those offerings?
- Will you specialise in just a few areas or provide a broad range?
- How will you provide added value?
5. Know your USP
Your USP, or ‘unique selling proposition’, is what sets you apart from your competitors.
To define your USP, you’ll need to figure out what’s different about your business and then explain how that benefits your customers.
Your USP might be unique services or products, a different approach to customer or client service, or a premium quality, for example. Here are some examples from well-known companies:
- FedEx: “If it absolutely, positively has to get there overnight.”
- Avis: “We’re number two. We try harder.”
- M&Ms: “The milk chocolate melts in your mouth, not in your hand.”
- Target: “Expect more. Pay less.”
- Dominos Pizza: “You get fresh, hot pizza delivered to your door in 30 minutes or less, or it’s free.”
(Not sure if that last one is still a thing, btw, but let us know if you find out!)
Your unique selling point doesn’t necessarily have to be a tagline or slogan. It will, however, inform your marketing and help you to sell your products and/or services.
Steps 1-4 should inform your thinking here.
6. Identify your niche (and your ideal client)
The Business Dictionary defines niche marketing as:
“Concentrating all marketing efforts on a small but specific and well-defined segment of the population. Niches do not ‘exist’ but are ‘created’ by identifying needs, wants, and requirements that are being addressed poorly or not at all by other businesses and developing and delivering goods or services to satisfy them.”
Identifying your niche market (and therefore your ideal client) can make marketing and business development easier. When you know exactly who your products/services are for, it’s much easier to target those people and their needs.
For some businesses, the niche might be obvious. Others may have to work a little harder to define a niche that will work for them. The market research and competitor research you carried out earlier will help here.
7. Write your elevator pitch
An elevator pitch (a “succinct and persuasive” sales pitch) is a quick-fire way of explaining exactly what your business does.
This simple template can help you to get started, but by no means should you leave it here.
[Name of the business] helps [type of client] to solve [specific problem].
Your elevator pitch should be short – roughly 20-30 seconds – and it also needs to grab people’s attention and be memorable. It should also touch on what makes you stand out (remember that USP in step 5?).
It will likely change over time, and that’s fine, but you should never be without one. After all, you never know when you might run into your next big investor or game-changing client or customer!
8. Write your mission statement
Unlike your elevator pitch, your mission statement isn’t about selling your business to the outside world. It’s more of a strategic tool that’s used to make sure everyone within your business is on the same page.
Your mission statement should cover what you do, how you do it, who you do it for and how you give those people value.
This video on writing a mission statement (from business media brand Fast Company) is definitely worth 4 minutes of your time.
Along with your mission statement, you might also outline what your company vision is and what your key values are.
Your vision is a future-based statement of where you expect your company to be in say 5, 10 or 20 years’ time. A vision statement might cover the impact you hope to have made and how you expect to change the world (or at least your customers’ worlds). It’s meant to inspire your employees and give them direction.
Your key values are words or phrases to describe what you stand for and believe in. They will inform any future business decisions you make and actions you take.
9. Set SMART business goals
Map out your business goals for the next month, quarter, year, and even five years.
To do this effectively, you should ensure your goals are SMART. That means making them:
- Time sensitive
Having a list of goals that are written down in a considered way will give you a clearer focus and help you to use both your time and resources effectively.
It will also make it easier for you to communicate with your team (or anyone you outsource work to, such as a virtual assistant).
10. Know your numbers
Of course, it’s essential that you get to grips with the numbers, if not for formal reasons – such as securing funding from the bank or an investor - then at least for your own benefit.
Free cloud-based accounting software, such as Wave, can help you to manage your business finances and create and track branded invoices. It also allows you to scan in or email receipts for easy reconciliation and you can link it up to your UK bank account.
It’s essential that you know what your requirements are in terms of taxes, insurance and business rates, as you’ll need to factor these things into your projections.
Find out more at GOV.UK.
11. Revisit your business plan regularly
Once it’s done, don’t just put it in a drawer and forget about it.
Your business plan is a valuable tool that you can use in many ways.
Don’t let it confine or restrict you, but do make use of all that work you put into creating it.
Try checking in every 3 to 6 months and asking yourself (and your team, if you have one) the following questions:
- Have we achieved what we set out to?
- If not, why not? And what can we change to help us get there?
- What are we doing well?
- What are we not doing so well?
- Is it time we set ourselves some new challenges?
- What feedback have we received from our customers?
- How can we act upon that feedback?
We hope you found this guide on how to write a business plan helpful. It’s a big step, deciding to set up your own business, but with a solid plan and the right support, it might just be the best thing you ever did.
(Bonus tip: These 12 essential productivity tools will help you to manage all the work that’s involved in writing your plan and beyond).
For business and marketing support from our small team of experienced virtual assistants, get in touch today.