Why do I need a business plan?

A business plan is a document that describes your business. It will show in detail:

• why and how you will run your business
• financial forecasts – how much money you will make and how, how you will raise funds
• how you will promote it
• who your customers will be
• how many staff members you’ll need and at what stage they will be recruited.

A business plan is a working document which can be changed and updated at any time. There is no set format for a business plan and it can be a formal or informal document.

It is not necessary to have a business plan. However, spending the time to put a business ideas down on paper and planning what you will do should mean that you can work towards creating a successful and financially viable business.

It will help you: 

• see whether your idea will work as a business and make money
• set out short- or long-term goals and objectives
• manage your cash flow by listing your incomings and outgoings over  a period of time
• show investors you have a sound and reliable proposition, one worth investing in. 

A business plan should be able to answer the following questions:

Your business plan may be a document that only you will use. However, if you are looking to secure a loan from a bank or find potential investors, they will often be looking for you to provide them with a clear business plan. 

When starting a new business you’ll need to consider the following:

• You must be aware of the taxation implications, such as VAT, self-assessment and payroll.
• There may also be specific legal requirements that relate to your business idea, such as employment law, contract law and licensing.
• You must have an awareness of your competitors, what they offer and their pricing structures.
• Think about your potential customer base and how you will market and sell your product or services. Also think about any suppliers you may need