Lots of things go into a business plan: startup costs, marketing tactics, operational strategies, financial statements and other essential elements. A well-written plan can help you find the initial funding you need to launch your new venture. Creating a business plan can spark inspiration, too — you might come up with additional business goals or product ideas, for instance.
In this guide, we’ll talk about the general elements of a business plan, and explain how you can use your plan to fund your startup.
What’s in a business plan?
Before you launch your new venture, you’ll need to write a business plan. If you can project startup costs and estimate your business’s ongoing financial needs, you’ll find it easier to secure funding. Writing down ideas can also help you focus on long-term objectives.
Most business plans are broken into these seven sections:
- Executive summary: This is a one-page high-level overview of your company. You’ll include a description of your business, a short list of the products or services you sell, and the customers you think will buy them.
- Business overview: This is a detailed definition of your venture, your vision and your business structure. You’ll include your mission statement in this section.
- Market analysis: Here’s where you define your competition, describe your market and talk about trends and potential growth within your industry.
- Products and services: Describe your products or services in more detail, and tell the reader why they’re better than what your competitors offer.
- Marketing strategy: This is where you talk about your marketing strategy. Include a brief breakdown of your marketing budget, and list the ways you’ll advertise your business.
- Operational strategy: List the things you need to run your business day to day: your physical premises; essential tech or machinery; your financial needs; your logistics plan and so forth.
- Financial strategy: Include an income statement, a balance sheet and a cash flow statement to prove your money-handling prowess.
If you haven’t performed a SWOT analysis of your business yet, this is the perfect time to do so. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. You can SWOT analyse your competitors, too, and look for ways to gain advantage in the marketplace.
Five startup costs to consider
Startup costs vary from business to business. Some ventures are much cheaper to set up than others. In general, though, you’ll need to plan ahead for some (or all) of the following costs.
Business planning costs
Business planners can help you get a handle on your new venture. If you decide to hire a business planner, you’ll need to research fees and allocate a budget. Business planners often bundle their services, so you might get a SWOT analysis, a feasibility study and a comprehensive business plan for your money.
If you have limited funds, you can analyse the market and write a business plan on your own. We’ve written an article about DIY business planning, which you can find here. Tools like LivePlan and Bizplan can help you create a business strategy, too.
Market research expenses
It’s important to do thorough market research before you plunge into the fray. If you know what your competitors are doing — and how they’ve been successful — you can stay one step ahead of your industry peers. If you pay a professional to do market research for you, you can focus on other aspects of your fledgling venture.
There are lots of resources available for DIY market research, too. If you enjoy digging into data, check out BRAD or Mintel. Free tools like Google Keywords can provide insight into the keywords your competitors use to drive traffic.
Technology costs vary greatly between businesses. If you plan to manufacture products yourself, you might need specialist machinery. If you’re a tech company, you’ll probably need laptops, servers and networking equipment. Don’t forget about tech-related subscriptions: on-demand data storage, for example, or platform as a service (PaaS) products.
Tech isn’t something you can create easily in-house, so technology costs are hard to avoid. If your budget isn’t particularly robust, look for second-hand machines and refurbished computer equipment.
Sales and marketing costs
According to industry experts, younger companies tend to spend more on marketing than established organisations. Advertising firm Wordstream, for instance, suggests that new companies spend between 12 and 20 percent of gross revenue on marketing. According to inbound marketing company WebStrategies, most businesses devote just over 11 percent of gross revenue to their marketing budgets.
Most marketing mavens agree that business-to-customer (B2C) companies spend more on marketing than business-to-business (B2B). Paid marketing channels include pay per click (PPC) options like Google, social media ads and affiliate marketing. Organic — i.e. unpaid — marketing options include DIY blog posts and search engine optimization (SEO) tactics.
Some types of UK-based businesses have to have insurance; others don’t. If you employ any staff members — even one — you have to have at least £5 million in Employer’s Liability (EL) insurance. If you plan to operate as a solicitor, an accountant or a healthcare professional, you’ll need professional indemnity insurance as well. Builders and home improvement contractors need public liability insurance, too.
Business insurance is worth looking into, even if you operate from home. In short, the right kind of business insurance can protect your income if the worst happens. Some policies protect against business interruption, while others cover damage to your premises or the breakdown of your supply chain.
Save time on business admin with a simple app
After you launch your business, you’ll have a long list of things to do every day. That’s where Countingup comes in. The app is saving time for thousands of business owners across the UK. It’s the two-in-one business current account and accounting app that automates time consuming bookkeeping admin.
With automatic expense categorisation, receipt capture tools and cash flow insights, you can confidently keep on top of your business finances and save yourself hours of accounting admin, so you can focus on doing what you do best. Find out more here.