Are you wondering how to write a business plan and how it can help entrepreneurs in business? In this post, we explain the purpose, key components, and limitations of a business plan.
Learn more by watching the video and reading the blog post below:
The Purpose of a Business Plan
If you want to start your own business, writing a clear and well-structured business plan can really help take that entrepreneurial idea you have and pave the path for it to become a reality.
But you might be thinking, what exactly is a business plan? What benefits will it provide me as an entrepreneur? And how do I write one which is going to help me to start and run my own successful business?
Well, in simple terms a business plan is a formal document which is created by an entrepreneur and contains details about all the essential ingredients which are key to your business being successful.
Helping you as the entrepreneur to identify and consider the strengths and weaknesses of your business idea as well as what is required to make it successful and minimise any potential risk.
A business plan also provides you with the foundations to understand the financial side of your business and help you as an entrepreneur to obtain finance as you are able to formally provide potential lenders and investors with a clear, concise overview of the business and a vision of its future progress and profitability.
It’s important to note, that there isn’t just one standard template for a business plan, and it is often adapted to suit the business and the potential stakeholders who it is intended for.
The Key Components of a Business Plan
It’s common to see the following ten key areas covered across several sections within any good business plan, these include:
1. The business idea
2. The aims and objectives of the business
3. The market
4. The location
5. Personnel
6. Buying and production
7. Premises and equipment
8. Financial forecasts
9. Marketing
10. Sources of finance
The Limitations of a Business Plan
Firstly, it’s only a plan, therefore it’s likely that what you put down on paper and forecast won’t be the exact result. For example, you could overestimate revenue and underestimate costs which could lead to serious cashflow and liquidity issues further down the line, meaning you need to obtain more finance or the business ceasing to exist long term.
But, you are allowed to pivot and adapt your business plan over time. In fact, a business plan should be viewed as a working document as you and your business develop and grow.
Scroll through our infographic to find out more.
