How to create a simple business plan

A key task when starting up is drawing up a sound business plan that outlines your business idea, your strategy for achieving your aims and other key information including financial and marketing plans. It is an essential step for any budding entrepreneur. Creating a simple business plan helps you assess whether your business idea is viable and sets out how you are going to achieve your dream of starting a business. Alan Gleeson explains how to create a simple business plan

What is a business plan?

A business plan is a document that enables businesses to look ahead, focus on key issues, allocate resources where they're needed and prepare for problems and opportunities well in advance. Too many people think they only need a business plan when they're starting up or when they need to borrow money or attract funding. A business plan is just as important when running a business.

What is a simple business plan?

A simple business plan is a business plan typically produced by small, start up businesses. You write your business plan as normal but you reduce the breadth of content in certain sections of your business plan.

Is there such a thing as a standard business plan?

Usually, a business plan will describe the firm's products or services, customers, competitors, management team, strategy and implementation plan, as well as detailing profit and loss projections, sales and cash flow forecasts. The key points and figures are highlighted in an executive summary, which appears at the beginning of the plan.

Why would I write a simple business plan?

Simple business plans are appropriate when there are a lot of unknowns or when you are still at the idea creation stage. At this point you might not want to invest significant time and resources in a full-blown business plan but are looking to produce a business plan that will enable you to forward it to interested parties for further consideration. Once you have received feedback you can then proceed with a full-blown business plan.

What sections does a simple business plan contain?

The simple business plan contains much of the same content of a standard business plan but certain sections can be put on hold. For example, the cash flow statement and balance sheet sections can be skipped and a greater emphasis can be placed on the idea, the market opportunity, the likely demand and the routes to market.

What is the point of a simple business plan?

One frequent problem entrepreneurs have is that they can keep ideas ‘in their head‘ rather than commit them to paper. However, ideas are practically worthless when they relate to a product or service in isolation (or without providing a market and commercial context). By producing a simple business plan, the entrepreneur is taking the next step towards their idea reaching fruition.  A simple business plan will ensure that there is a holistic view of the business opportunity and an assessment of whether it is commercially viable or not.

How do I create a simple business plan?

You can write a simple business plan from scratch paring back some of the content you might include in a full business plan. If you are unsure where to start, there are plenty of free and subscription business plan templates you can use.

Business Plan Pro has the option of a simple business plan built in. The benefit of this is the number of tasks you need to undertake is reduced from the number needed to produce a standard business plan.

How long should my business plan be?

It's not a simple question of number of pages. A 10-page business plan with dense text and no graphics is harder to read and digest than a 20-page plan broken up with bullet points, user-friendly illustrations and charts. A well laid-out plan will offer readers a sufficient overview of its main points after a quick skim. Format, headings, white space and illustrations make a big difference. Key points should stand out as immediately as they do in an effective sales pitch or presentation. Also make sure the document looks good and reads well. Any mistakes will make you look unprofessional.

What's the most important element of a business plan?

You've got to get the executive summary right. In most cases experienced people will read this first and if it doesn't instantly capture their imagination, inspire or impress them, they won't bother reading the rest.

How important is the financial information?

Sound figures underpin all good business plans. Your financial information must stack up when scrutinised. Specifically, I'm talking about cash flow predictions, sales forecasts and profit and loss projections. Cash is usually misunderstood to mean profits, but making profits doesn't mean you'll have enough cash to pay your bills. Many profitable ventures have gone under because of cash flow problems. Your plan must also show your business has effective cash flow management measures.

Should my business plan outline management responsibilities?

Brilliant strategies and beautifully formatted planning documents are just theory unless you assign responsibilities to managers, with clear objectives, dates and budgets that enable you to measure results.

Do I need different versions of my business plan?

Don't think in terms of a 'business plan', rather different versions of your business plan, each tailored to the reader and guided by your specific objectives. If you're trying to attract funding, your business plan should provide compelling evidence why you need the money and evidence that you can afford to pay back any loans.

Written with thanks to Alan Gleeson, SaaS marketing consultant