Creating a Business Plan: This Is What You Need To Include
If you want to launch your own business successfully, you need a well thought-out concept. This is best realised with a business plan. In this article, you will find out what you need to include in such a plan and how to organise the various components sensibly.
- Cover Page: The First Impression Counts
- Table Of Contents
- Executive Summary: The Most Important Facts In a Nutshell
- Founders - Who Am I?
- Idea and Offer
- Target Group - Who Do I Want To Address?
- Market and Competition
- Strategy: The Path To Success
- Organisation: What Should My Business Look Like?
- Financial Plan
- SWOT Analysis
- Milestones: What Do I Want To Achieve and When?
Whether you are starting your own business as a freelancer, sole trader or together with others, a well-structured business plan will significantly increase your chances of success - regardless of whether you need to convince banks and investors or are just creating it for yourself.
If you plan your product or service in this way, it will be much easier for you to pursue a clear strategy and keep an eye on the opportunities and risks. But before we look at the specific content of a business plan, let's focus on the basics.
What Is a Business Plan?
Regardless of whether you want to become self-employed as a freelancer or set up a company: A business plan is a fundamentally important planning tool for determining the prospects of economic success and ultimately deciding about the realisation of a business.
How Comprehensive Should a Business Plan Be?
There is no rule for this question, but a good indicator is the nature of your business project. As a freelancer, you can usually outline your plans in 15 to 20 pages. If, on the other hand, you are planning to found a start-up, a business plan can quickly reach 20 to 40 pages. If, for example, it is a start-up in the tech sector with a high need for capital, the number of pages can increase even further.
It is important to prioritise quality over quantity. It is therefore better to concentrate on high-value content rather than on achieving a certain number of pages.
How Long Does It Take To Create a Business Plan?
Depending on your project and your external circumstances, the time it takes to create a business plan can vary from a few weeks to a few months. Whether you can devote all your time to your business plan or are creating it alongside your actual job: Allow yourself enough time to carefully research all points, formulate the text section and draw up a solid financial plan. This will only work if you don't rush.
Important factors for determining the effort include the following questions:
- How complex is the planned business?
- What knowledge do you have?
- How much time can you put into the business plan each day?
But what does a business plan include?
If you want to put your business on a secure footing, you should also think about the professional risks you are exposed to. That's why we've summarised the most common risks for you in the article 5 Business Risks Freelancers Should Know About.
There are no fixed rules for creating a business plan, but over the years, certain components and a specific structure have become established. Stick to these standards, maintain a common thread and ensure that your readers can find their way around easily. In this way, you will also cover all important points and fulfil the expectations of banks and investors.
The most important components of a business plan are
- Cover page
- Table of contents
- Executive Summary
- Founder (Team)
- Idea and offer
- Target group
- Market and competition
- Organisation (location, legal form, etc.)
- Financial plan
- SWOT analysis
Within these main chapters, there are a number of sub-chapters, which we will cover in detail in the course of the article.
There is no second chance to make a first impression - this also applies to the creation of a business plan. That's why you should include the relevant data on your cover sheet:
- Company name with logo - as a freelancer you can also use your name and your offer here instead, for example: Jessica Maier - Webdesign
- Industry and project
- Addressee and purpose of the business plan
- Contact details
- Creation date and planned founding date
But also think about an appealing layout with one or two photos or mock-ups. Important: Don't overload the whole thing and only include images on your cover page that offer the reader real added value.
The table of contents should give the reader of your business plan an overview of what to expect. Although there are no fixed rules on the order in which you should organise the individual components, we would like to recommend the following structure:
Key point of the chapters
|Founder (Team)||Motivation to found a business
|Idea and offer||Offer
|Target group||Needs/problems of the customers
Definition of the target group
|Market and competition||Market potential
Unique selling point
|Financial plan||Sales planning
|Milestones||Steps on the way to starting a business|
Here you will find a summary of the most important content of the business plan. Keep this section as concise and informative as possible, as it is the reader's first point of contact and often determines whether he/she pays further attention to it. As it is a summary of all other chapters, the executive summary is placed at the beginning of the business plan, but is only written at the end when all other points have been set down in writing.
Briefly explain which central customer problem your business idea solves. What is your most important customer-relevant unique selling point? What do you do better than the competition? Where do you see yourself in ten years' time? Outline the long-term market position you are aiming for and show what vision you are pursuing.
At this point, it's all about you and your team (if you have one). What exactly motivated you to start your own business or set up your own company? Show why you are exactly the right person for this area and what qualifications you bring to the table. But be careful: CVs and certificates have no place here, they belong in the appendix!
Every business foundation starts with an idea. It forms the basis for your offer, so this section should not be underestimated. Answer the following questions to work out the most important points about your business idea and offer:
- What do you offer?
- What does your offer look like in detail?
- What is the core idea that ultimately generates sales?
- What unique selling point distinguishes your offer from that of the competition?
- What problem does your business idea solve?
- What are the benefits for customers who take advantage of your offer?
At this point, you are also doing the groundwork for analysing the market and competition. Because only if you can describe your offer in detail will you be able to determine the size of the potential market and make forecasts about its growth or shrinkage.
If you have an offer, you should also know who it is aimed at. Who will buy your product or pay for your service? Define your target group as clearly as possible based on concrete facts and don't forget to differentiate between private (B2C) and business customers (B2B). You should also take a close look at the purchasing behaviour of your target group in order to better assess your potential sales.
After the preliminary work in the previous point, you now have a solid basis for determining the size of the existing market for your offer. Now you need to do some research. Find out how much turnover the industry generates, describe your target market and look at developments in recent years. Perhaps you can even recognise some trends for the future?
Once you have described your target market in detail, the next logical step is to enter the market. How do you want to secure your share? Are there any hurdles that could prevent you from doing so? If so, how do you deal with them? Play through possible scenarios and create a roadmap that you can use to react to difficulties. Then it's time to take a closer look at your competition. Are you in competition with other providers? If so, how aggressively are they responding to new rivals? Take a close look at what other self-employed people or companies in your industry offer, what market share they occupy and what the advantages and disadvantages of these offers are. You should also find out whether your own target group is closely tied to these competitors.
This comprehensive market research is a lot of work, but it is essential in order to determine the future sales potential of your business. Carry out your research soberly and analytically, because only then you will know the environment you are operating in and be able to react accordingly.
You Take Care Of Your Business, We Protect You
Starting your own business requires a lot of preparation and good planning, which does not end with the finalisation of the business foundation. However, no matter how comprehensively and regularly you familiarise yourself with the potential risks of your industry, there is always a danger of professional mistakes for which you could be liable with your personal assets in the worst case. To avoid jeopardising your livelihood, we therefore recommend taking out Professional Indemnity Insurance through exali. If you are confronted with claims for compensation from your clients or other third parties, the insurer will bear the costs of justified demands and defend against unjustified claims on your behalf.
By the way: If you are a business founder when you take out your Professional Indemnity Insurance, you have the chance of a 15 per cent discount for the first two years of insurance. If you have any questions, please contact our customer service from Monday to Friday from 9:00 to 18:00 (CET) on 0821 80 99 46 0.
Now that you have dealt intensively with the "what", it's time to look at the "how" in the form of a future strategy for your business. There are essentially three different orientations:
- Cost leadership (you are the cheapest)
- Differentiation (you differ from your competitors in important ways)
- Niche strategy (you occupy a niche or gap in the market)
To find the right strategy for your business, think about how your offer differs from the competition, what positioning you are aiming for in terms of price and performance and which criteria are particularly important to your target group.
Once you have determined who your future customers should be and what you offer them, you must of course draw their attention to your offer with the right marketing mix. The selected measures should reach your target group as efficiently as possible. Therefore, think about where you can best reach potential customers: Online? Offline? Rather at home or perhaps at work? Make your offer available via the appropriate channels.
To do this successfully, divide your plans into short and long-term goals and calculate exactly how much you want to spend on each measure. Of course, you also need to know how much money you need to spend upfront in order to attract new customers. You should therefore take a closer look at the following points:
- What stages do prospective customers go through in the funnel until the final purchase decision is made?
- What measures are necessary for this and what costs will you face?
Also plan your pricing strategy along with possible discounts, subscriptions, free months, etc. and include customer loyalty measures.
This section includes the important key data of your business, such as the name, legal form, location and founding date. If you are not founding alone, but as part of a team, now is the right time to show who is involved in the foundation and in what form. Here it makes sense to approach the matter in reverse and work your way from the necessary requirements and authorisations for founding a company to the legal form. This way, the readers of your business plan can easily understand why you have opted for a certain type of company. If you need to apply for patents and property rights or have obtained the necessary authorisations, this is the right place to explain your efforts.
The structure of your organisation also belongs in this section. Describe all processes, outline structures and show your own competences or those of the entire founding team. If you are planning to hire employees, state how many staff you are aiming for and where you want to find them. It is best to show the different responsibilities in an organisation chart so that it is immediately clear who is responsible for which area in your company.
Now we come to the heart of your business plan, which ultimately determines the financing of your business idea (if you need banks and investors to realise your business project). You have already shown at the beginning what you want to use to generate turnover, now it is time to "translate" these ideas into figures and determine whether your business idea is really viable and worthwhile in the long term.
This involves the following question: What and how much will be sold and at what price? This is important to be able to check whether your turnover is developing as planned or whether you may need to take countermeasures. This planning also forms the basis for the bank's decision to grant a loan - so pay appropriate attention to this part.
In your revenue model you show exactly how you earn money and present the main sources of revenue. Also forecast the development of your customer base. This includes how often your customers will make use of your services. How long do you expect the start-up phase to take? Are there seasonal differences that you need to take into account in your planning?
Next, consider direct and running costs as important components of your profit and loss account. Direct costs increase with turnover, for example when you manufacture a product: If demand is higher, you earn more, but you also have to produce more, which drives up production costs. On the other hand, there are the running costs or operating costs. These are fixed costs that are independent of turnover, such as rent or electricity.
Personnel is also an important cost factor and therefore an elementary component of financial planning. So if you employ staff, keep a record of the time and costs involved for each person. Don't forget yourself! After all, you also want to make a living from your business and should pay yourself an appropriate entrepreneurial salary.
Incidentally, this includes not only the costs for permanent employees, but also the costs you plan for external employees such as tax consultants, accountants, etc.
List all marketing measures and their costs here. Also calculate the costs for individual potential buyers and take any wastage into account.
Starting your own business costs money. The amount of these costs depends primarily on the legal form you choose and whether you seek support. Therefore, list all expenses for business registration, notary fees, legal fees and so on at this point.
If investments are necessary at the beginning that will have a positive impact on business development, this is the right place to document this. What these investments actually look like varies depending on the industry: If you want to start your own webshop, you may need an initial stock, whereas as a web designer, suitable IT equipment and software licences are essential. Set out the costs here and also think about possible follow-up or replacement investments if you need to replace old equipment after a few years, for example. Consider (with the help of an accountant if necessary) how you want to amortise these investments.
This is a forecast of the available financial resources and the amount of capital required for the next three to five years. It contains forecast incoming payments and planned outgoing payments. Also take into account any taxes due, various payment deadlines and possible defaults and plan a buffer for emergencies. Good liquidity planning can prevent bottlenecks and significantly reduce the risk of insolvency.
It is important to consider this point in order to determine the capital requirements of your business and cover them as completely as possible. Set out how much equity capital is available, how much additional borrowed capital you need and how you intend to obtain the latter. If you take a close look at this aspect, it will quickly become clear whether your existing capital is sufficient or if you need to adjust your financing.
Every company is confronted with payment defaults at some point. In order to minimise the risks to liquidity, it may be worthwhile for you to sell your receivables via a factoring company. Read the article Factoring: Advantages and Disadvantages For Self-Employed to find out whether this model is worthwhile for your business.
This comparison of costs and turnover shows whether your business model is really viable. This overview of profitability is important in order to recognise whether you can cover all fixed costs and also generate a profit. Ideally, you will be able to see how your annual turnover is developing and at what point you will be operating profitably. Take a look at your gross margin and determine the profit you have left after deducting taxes each year.
With a SWOT analysis, you can ruthlessly analyse the strengths and weaknesses of your business project in comparison to the competition and also identify opportunities and risks in the process. Can you possibly build on future trends? What are the biggest risks for your business and what do you do if one or more of them materialise? Once you have completed this step, define measures to make the most of the opportunities and minimise the risks. Ideally, once you have completed this point, you will be prepared for various scenarios and will no longer be so easily thrown off course by unforeseen events.
It is not enough to determine once what risks your business is exposed to. Circumstances can change over the years and if you want to survive, your business should adapt to these changes. Entrepreneur Adam Butkiewicz tells us in an interview how such an entrepreneurial reorganisation can succeed.
Now that you have dealt with many important aspects of your business plan, from the idea and strategy to the target group and financing, it is time to explain what goals you are pursuing with your start-up. The most obvious one is, of course, that you want to earn money with your business and be profitable. However, there are also other milestones that you can define: Do you want to make the world more sustainable, more equal or more accessible with your offering? Here you can show what drives you!
However, a structured approach is also worthwhile when setting out your ideals. Divide your goals for the next three years into short, medium and long-term plans. For example, a completed start-up, the opening of an online shop or a specific sales target are suitable short-term goals. In the long term, you could possibly set yourself a specific annual turnover target. Describe in detail what needs to be done by when and demonstrate to readers that your business is fit for the future.
Setting up a company goes hand in hand with a certain amount of bureaucracy. Forms have to be filled out, CVs drawn up, studies commissioned, contracts signed, authorisations obtained and much more. These important attachments have their place in the appendix of the business plan. Make sure that this section does not become a collection point for irrelevant documents for which you have not found a better place when writing your business plan.
The length of this article alone shows that writing a comprehensive business plan is a lot of work. Nevertheless, it always makes sense to draw up such a plan before starting your own business - even if you are not looking for investors or want to take out a loan from a bank. The aim of a business plan is basically to think about your business and take a close look at what capital you need, who you should approach, what your competition looks like and so on. All of this is a good way to think through your start in self-employment and create a flexible roadmap that will guide you step by step through your business foundation.
Vivien Gebhardt is an online editor at exali. She creates content on topics that are of interest to self-employed people, freelancers and entrepreneurs. Her specialties are risks in e-commerce, legal topics and claims that have happened to exali insured freelancers.
She has been a freelance copywriter herself since 2021 and therefore knows from experience what the target group is concerned about.