What is a business plan?
Simply put, a Business plan is a description of your future business. It’s a formal written document that describes your business's goals and the detailed strategy for achieving them. Your business plan acts as a roadmap, clarifying your ideas and guiding you from startup to growth. For new businesses, it is an essential tool for securing loans or investment, while for established businesses, it provides focus and a benchmark for measuring progress.
Why is a business plan important?
Creating a business plan is a vital exercise for any entrepreneur. It forces you to think critically about every aspect of your venture and provides several key benefits. A strong business plan helps you to:
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clarify your strategy - the process of writing down your ideas helps you to spot potential problems, set clear goals, and create a coherent strategy for success
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secure funding - it is an essential document if you want to secure a loan from a bank or attract investment. A detailed plan shows potential investors that you have a credible and well-researched proposal
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measure your progress - your business plan contains your objectives and financial forecasts. You can use it as a tool to track your performance against your initial targets and make adjustments as your business grows
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communicate your vision - it is a powerful document for convincing potential partners, key employees, and important suppliers to support your business
What should a business plan include?
While there is no single, mandatory format, a comprehensive business plan typically includes several key sections. Each part should build on the last to tell a compelling story about your business and its potential.
The executive summary
This is the most important section of your business plan. It’s a short, powerful overview of your entire plan, placed at the beginning but often written last. Its goal is to grab the reader's attention and convince them to read on. Your executive summary should briefly summarise your business concept, financial highlights, and your mission.
For more details, read Executive summaries and business outlines for business plans.
Business description
In this section, you should provide a more detailed overview of your business. Describe what your business does, the market need it aims to solve, and your business’s legal structure (eg sole trader or limited company). You should also clearly state your business’s mission and vision, and what makes you different from your competitors.
For more information, read Executive summaries and business outlines for business plans.
Market analysis
A thorough market analysis demonstrates that you have a deep understanding of the industry you are entering. It should include an honest assessment of your main competitors, the size of the market, and a detailed profile of your ideal customer. For a deeper dive, read our guide on Market analysis and marketing strategy.
SWOT analysis
A SWOT analysis is a powerful framework for assessing your business from four key perspectives: Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses are internal to your business, while opportunities and threats are external factors in the market. Including a SWOT analysis shows investors that you have a realistic view of your position in the market. Learn more by reading our guide on how to perform a SWOT analysis.
The management team and organisation
Investors often say they invest in people, not just ideas. This section should detail your business's organisational structure and introduce your key team members. Include short biographies for each, highlighting their skills, experience, and the role they will play in the business’s success. Find out more in our guide on Management teams, operations and logistics for business plans.
Products and services
Here, you should describe exactly what you are selling. Explain your products or services in detail, how they benefit the customer, and what your pricing strategy will be. You should also include any information on your suppliers and any intellectual property you own, such as trade marks. This is a great place to define your unique selling point (USP) - the one thing that makes your offer different from and better than the competition.
Marketing and sales strategy
This section outlines how you plan to reach your target market, attract customers, and make sales. You should describe your marketing and advertising plans and detail your sales process, from initial contact to closing the deal. To learn more, read our guide on Market analysis and marketing strategy.
Financial projections
This is a critical section for any potential investor or lender. It should include detailed financial forecasts that show your business is viable and has strong potential for growth. Typically, this will include a sales forecast, a profit and loss forecast to show your projected profitability, and a cash flow forecast to demonstrate you can cover your bills on time.
It is vital to explain the key assumptions you have made in creating these projections. To understand these documents in detail, read Financial information and requirements for business plans.
How long should a business plan be?
There is no fixed rule for the length of a business plan. The ideal length depends on its audience and purpose. A detailed plan for securing a large bank loan may be 20-40 pages, while a plan for internal use could be much shorter.
Increasingly, entrepreneurs are using a ‘lean business plan’. This is a much shorter, one-page document that focuses only on the most essential information, using bullet points and charts. This format is useful for quickly testing and sharing an idea, but most investors will still require a more detailed, traditional business plan. Use our simple Business plan template to make your plan with ease.
A well-researched business plan is more than just a document for securing funding; it is a vital tool for building a successful and sustainable enterprise. It provides the strategic direction needed to navigate the challenges of the market and turn your vision into a reality.
If you are ready to start building your strategy, you can make your Business plan. If you have specific questions about the legal aspects of your plan, you can Ask a lawyer for expert advice.
