How to write a business plan

You’ve had an idea burning away and you’re finally taking the big step to start a business. But before you get going, you need to write a business plan.

There are lots of questions you might be asking yourself:

How is your business going to succeed?
How is your business going to operate?
What are your strengths and weaknesses?
What are your competitors up to?
How much profit can you make?

A business plan is basically a document that helps answer these questions by setting out your business objectives and strategies, but they can be a bit daunting to create.

Why you need a business plan

Writing a business plan sets out what you want your business to achieve from the start, and can help keep your goals on track.

Some other benefits are:

Putting pen to paper can help you find gaps or blindspots you hadn’t previously considered
It can help you prioritise the tasks that’ll get your business off the ground
It can help you set achievable goals and objectives
It will give you a clearer idea of your business’ journey over the next three months, three years and beyond! 🚀

What should you consider before writing a business plan?

Your target audience and market

Who is your business plan for? Is it for you to set clear objectives for yourself? Or is it for investors? Keep your audience and their reason for reading your business plan in mind.

Do your research

It sounds obvious, but delving into the market landscape and doing some competitive analysis will help you see where your business will succeed and your potential market share.

Consider how the businesses in your space are performing and the competitive advantage you could have over them. As with any plan, the research behind it is almost as important as the plan itself.

Look at reliable and relevant data

You’ll probably have lots of data in your business plan showing how your business will work, the target market you’re breaking into and how your competitors are performing. It’s helpful to make sure that all the data you’ve used is reliable and from a verified source. And make sure that it adds to a point you’re making in your plan – there’s probably no point including it otherwise!

How to write a business plan

Try to keep it concise: focus on the bits that give the clearest picture of what your business is, the problem it addresses and how it’s going to work. Give your plan a defined structure. Tell the reader what they need to know.

Stick to facts: don’t over-exaggerate things that are hard to prove, like the profit you think you’ll make.

Ask for help: input from other people can be really valuable – whether it’s from experts in your industry, people who’ve had similar experiences, or just someone to proofread your plan. Reaching out to people directly on LinkedIn can be a good way to go about this, along with asking friends and family to introduce you to anyone they know.

Why do business plans fail?

There are lots of reasons why business plans fail. From not conducting research, failing to understand your competitors and customers, or getting the maths wrong in your financial projections.

What should a perfect business plan include?

An executive summary

Your executive summary should give your reader the clearest picture possible of your business. What problem does your firm solve for its customers? What’s your main business objective? This section should pull the most important facts, figures and statements from the other sections in your plan.

Consider writing this last, once you’ve been through each element of your business and ironed out any potential problems.

A business profile

This bit usually comes after your executive summary and is more factual. Keep this section brief so you aren’t repeating the previous section too much. You could include things like:

An outline of basic information like location and the type of business you’re considering (for example a sole trader or limited company)
All the people behind the business and their backgrounds
A short mission statement
Your products and services
Your target market and audience
Your business objectives: outline what you want to achieve in the short-term (and what the rest of your plan will show)

Strengths and expertise

You want to show why you’ve got what’s needed for this business to succeed. Don’t be afraid to show your strengths or the strengths of your management team. It’s also worth considering talking about mistakes you’ve made and lessons you’ve learned up to this point. It’s a great opportunity to show your passion and experience, and that you’re aware of the areas you need support in that an investor could help with.

Market analysis

Based on your extensive research, be honest about the challenges and opportunities within your target market. Demonstrating how much knowledge you have shows your reader that you know what you’re talking about and care deeply about your business. Even if they’re an expert in the field, show that you share their interest. Explain why your business will succeed in this market and what makes it different from competitors.

Competitor analysis

If your market analysis section shows the opportunities, this section shows you’ve thought about the competition and how you’re going to succeed despite them. You may want to consider not only your current competition, but any future competition that might enter your market – this shows you’ve thought about how the market’s growing. When doing your research on competitors, consider these points:

What are their strengths and weaknesses?
What are their business strategies?
How are they executing these strategies?
What might your competitors do when you enter the market?
What gaps have they left that your business will fill?

How operations will work

You’ve researched the market and realised the opportunity, now it’s time to think about how things will work day to day. How will you use social media? What processes will you need to manufacture your product or provide your service? How will you handle client accounts and invoicing?

Monzo’s Business Account connects with Xero, FreeAgent, Sage and Quickbooks, so you can decide if you want to use them.

There’s no need to switch between platforms or manually upload statements. You can keep on top of your accounts with everything in one place, and see where you’re at with a glance. We’ll never share your data with anyone else unless you agree to it, or ask us to.

Integrated accounting is available with Pro and Team level accounts, starting at £9 per month. Only sole traders or limited company directors in the UK can apply. Terms and conditions apply.

What everyone will be responsible for

It’s important to mention who’s responsible for each part of the business, along with contingency plans if people leave. If you’re looking for someone to lead a team, how are you going to find the right candidate? Once they’re onboard, how are you going to train and manage them? If you lose an employee, how are you going to cover their role in the short-term?

Any financial projections you might have

It’s good practice to include five years of financial projections. These figures will vary according to the success of your business. But don’t go overboard – show your reader the basics first.

If you’re an established business, use your previous data to form these projections.

These projections should include:

Sales forecasts
Budget for expenses
Cash flow statement (your cash in versus your cash out)
Profit and loss statement (often called P&L)
Balance sheet showing everything you own (e.g. kitchen equipment) versus everything you owe (e.g. what’s left to repay on a bank loan)
Break-even projection: gives you and your investors an idea of when you’ll begin to turn a profit

Templates and examples you can use

There are loads of free business plan templates out there, including financial tables and tips on how to break down your idea into an elevator pitch. Here are a few we recommend checking out:

The Prince’s Trust site for a downloadable template
This template is blank, but it gives you the opportunity to style it as you want
You can also try this editable template for presenting your business plan
There are hundreds of examples here to learn from

Which is better, a business plan or a pitch deck?

Pitch decks focus on who you are, what your business offers, the state of the market and why you’ll succeed. They’re usually made up of highly designed slides and contain snippets of information you’ve picked from your business plan. Basically, a pitch deck is a short summary of what your business does. The aim is to get potential clients or investors into a longer conversation.

A business plan is a much deeper look into your business as a whole and why it might succeed.

How long should a business plan be?

Have you ever read a 100-page document? Okay, how about 50?

That’s why you’ll usually see recommendations for anywhere between 15 and 30 pages. Having a page limit will help keep your business plan structured and clear, and prioritise key information that’s going to explain why your business will be a success.

Good luck! 💪

If you're a sole trader or a small business your eligible deposits may be protected by the Financial Services Compensation Scheme (FSCS) up to £85,000. To learn more about the businesses and deposits that are eligible, see here.

Get better visibility and more control over all your money with a Monzo Business bank account. Less time on finances means more time for the important stuff. Only sole traders or limited company directors in the UK can apply. Terms and conditions apply.