4 min read

Why do I need a business plan?

If you have a business idea then creating a business plan is a valuable tool to put your idea into practice.

What is 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.

Is it necessary to have a business plan?

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.

What should a business plan contain?

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

	The following information should be included:
What will the business do?	A description of the business: the purpose of the business, the products of services the business will offer, who will run the business, the proposed start date of the business, the location of the business.
Who will set up the business?	The details of the person/people who have the business idea: what experience and qualificattions do they have, what are their current circumstances, how much time and money can they commit to the business.
How will the business be set up?	This is the structure and the financial plans of the business.
How will the business be financed?	The business owners may have sufficient funds to finance the business venture or they may need investors.

Who can see my business plan?

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.

Is there anything else I need to know?

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