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An introduction to business plans: why you need one and how to use it

Darren JonesWith a bit of luck and the wind in the right direction, it could turn out to be the most important document you will ever put your name to. Your first business plan, as well as possibly turning your dreams into reality, will certainly get things straight in your mind and keep you on track. It will also demonstrate to others, especially potential investors, what you're planning on doing.

You've talked to your spouse or partner and got the all-clear to risk your fat salary and private medical cover in favour of pursuing your life-long ambition to be your own boss.

If you haven't already decided to do so, you should get down to your first serious task: writing down, step-by-step, what you aim to achieve with your new venture. This is your business plan. This plan is very important as it will be your starting point. It should take into consideration your realistic, achievable goals - both short- and long-term.


In other words, without giving away all your secrets, you need to document the mechanics of how you intend to set up your business. This will give those you need to involve – for instance, your bank, accountant, partners, employees and backers – a clear picture of your vision for the enterprise. So says Darren Jones – and he should know, 15 years on from doing that very same thing himself.

When Darren and his wife Sharron launched their AKC Home Support Services care business back in 1991, writing their business plan was one of the couple's first tasks. Darren confesses that at the time he considered it a bit of a chore. Today, however, he takes quite the opposite view, believing the business plan has helped keep AKC right on track and true to its original goals.

Unexpected benefits

Quote�It brings so many unexpected benefits – from helping secure finance to keeping us focused on our goals.�End Quote
Darren Jones

"When we started up, I knew we needed a business plan but saw it more as a document to show other people, rather than something that would help us particularly," says Darren. "Yet, if I was to launch another business tomorrow, I would certainly be much keener to write one because it brings so many unexpected benefits – from helping secure finance to keeping us focused on our goals."

Darren says he got help from his local enterprise centre, as well as looking at examples from other businesses and getting a template from his bank. He and Sharron mixed and matched bits from each of the documents since not everything applied to their particular business.


"We used our business plan to set out the financial and strategic goals we wanted to achieve, both in the short and long-term," says Darren. "Nowadays, we automatically review it annually. In fact, whenever there's a significant shift in our market, we use it straightaway to re-evaluate our goals."

He says the business plan has also helped AKC to avoid expanding too quickly. "Quite soon after we started up, we were offered work in another county. Although this was obviously very tempting and indeed flattering, when we looked at our business plan – and particularly our cashflow forecasts - we realised it was important to establish a firm base in one county first before taking on work in another, otherwise we were in danger of overstretching ourselves."


A few years ago, Darren and Sharron purchased a residential unit and their business plan helped them demonstrate why the bank should lend them the money. Without it being down on paper, Darren admits it would not have sounded such a viable proposition.

"The home added a new dimension to the business and one in which we had no trading record, but the bank lent us the money in view of our past performance. We were also able to show that we could offset some of the cost by using part of the new building as office space."

AKC's plan has also helped it to receive support from Shell LiveWire - an organisation that assists 16-30 year olds to start and develop businesses – since a business plan is required to enter its competitions. The company has twice been awarded prizes - not only bringing in extra money, but also valuable publicity.


Darren says there are a number of things he would do slightly differently if he could put the clock back 15 years. "I would try to get more assistance and perhaps make the document look a bit more professional. After all, it's your best way of gaining support for the business and the one thing your bank manager will remember other than the way you were dressed," he quips.

"If possible, you should show your business plan to an independent third party – such as a friend or family member with their own businesses - who will be able to point out if anything is missing or unclear. It's far better to make your mistakes on a practice run than when it really matters," he concludes.

If you are unsure about how to write a proposal, there are plenty of places that can help. Check out the other business planning pieces on bCentral for a start. Many major high street banks provide information packs and business plan templates. And, Business Link will be able to assist.

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What next?

Read about the research you should do before you sit down to write your plan.

Our business plan checklist will ensure you don't miss anything.

You should revisit your plan every now and then. Read how here.

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