How to write a business plan for your Start Up Loan application

When you apply for a Start Up Loan you’ll need to submit a number of documents to support your application.

One of these is a detailed business plan.

In this article we’ll explain what a business plan is, why you need one when applying for a Start Up Loan, and what information you’ll need to include when completing one.

What is a business plan?

A business plan is a crucial document that outlines the future direction of your business. 

It describes your business strategy and key objectives, guiding you from your current position to achieving the goals of your business, be that achieving a certain market share, launching a new product, expanding into other locations etc. 

A business plan includes important elements such as market analysis, financial projections, and the organisational structure of your start-up. 

Financial institutions and investors typically require a business plan before providing any funding. 

Even if you don't intend to seek external funding, a well-crafted business plan will serve as a valuable guide for your business as it grows.

Do I need a business plan to apply for a Start Up Loan?

When you apply for a Start Up Loan you’ll need to complete a business plan as part of the application process.

This is so the Start Up Loans team can get an idea of how viable your business is and ultimately, help the team determine if they are able to lend to you.

When you’re ready to apply you can make use of the free Start Up Loans business plan template.

What is included in a Start Up Loans business plan?

When you complete a business plan as part of your Start Up Loans application process you’ll need to include information on the following:

1. Your business 
2. Business objectives
3. Your skills and experience
4. Target customers
5. Market and competition
6. Sales and marketing plans
7. Operational plans
8. Back-up plan
9. Supporting evidence.

Read on for an explanation of what you’ll need to include in each section.

1.    Your business

The first section of the business plan aims to provide a high-level summary of your business. 

We want to know what your business does, the products or services you offer, where you operate, why you started your business, and your goals for the future.

Avoid giving a one-word answer and instead focus on giving us as much information as possible.

For instance, rather than just saying "Caterer," a more detailed response would be: 

"I run a catering service that offers a variety of culinary options, including gourmet meals, finger foods, and desserts for events such as weddings, corporate gatherings, and private parties. 

“My business serves the Greater Manchester area and specialises in using locally sourced ingredients. 

“I also provide customised menu planning and on-site cooking services to ensure every event is unique and memorable."

2.    Your Business objectives

Objectives are targets you're aiming to achieve, and they can be both financial and non-financial. 

Clear objectives are essential because they define what success looks like and align your business activities toward those goals. 

Even if you don't completely meet your objectives, they provide a benchmark for evaluating your performance and making improvements for the future.

The key to writing effective business objectives is to make them SMART: Specific, Measurable, Achievable, Realistic, and Timely. 

For example, instead of saying "Increase website traffic", a better objective would be "Increase website traffic by 20% by 31 December 2025."

Once you’ve created your objectives, you’ll need to decide whether they can be achieved in the short-term (current year), medium term (one to two years), or long term (three years and longer).

Medium and long-term objectives often build upon short-term objectives but, as they have a longer term into the future to be achieved and are more prone to external pressures such as the state of the economy, may be less specific.

Lastly, remember to explain how accessing a Start Up Loan will help you achieve your objectives.

3.    Your skills and experience

This part of the business plan will showcase the personal qualifications you have which underline your suitability for running a business and achieving the objectives you set out in the previous section.

In this section you don't need to include your entire CV though you can attach it as a supporting document if you’d like. 

Instead, just list any paid or voluntary work that might positively impact your ability to run your business. 

Mention the names of previous employers and your job titles (if applicable) and provide a brief description of the work you did and its relevance.

For example, if you're starting a landscaping business, you would list any jobs or projects related to landscaping, garden maintenance, or project management that you've been involved in.

You should also list the type of education or training you completed, the organisation you completed it with, and the date of completion. 

Include a brief description of what you learned and how this training will benefit your business. 

Focus only on the education or training relevant to your business, rather than listing everything you've ever done.

Lastly, you’ll also want to talk about any transferable skills, talents, or traits that you have that are relevant to running your start-up.

Make sure you include everything you’re good at and how they will help you as an entrepreneur.

Don’t worry about any skills gaps you might have, the people that judge your application for a Start Up Loan will be far more interested in how you plan to address them such as going on training courses or bringing in third parties to do the things you’d rather not.

4.Target customers

This section will focus on how well you know your customers and how prepared you are to meet their needs.

The Start Up Loans business template gives you the option to define your target customers by age, gender, income, types, and target regions.

The clearer you are about who your customers are, the more effectively you will be able to identify, target and convert them.

Next, you’ll need to consider where your target customers are based. 

If your business operates locally, such as a hairdresser serving a specific area, your target regions might include the city where you're based and any neighbouring towns within a 10-mile radius. 

Conversely, if you run an e-commerce business that delivers across the UK, you might define your target customers as national. 

Additionally, consider any specific cities, counties, or regions where you are focusing your sales efforts.

The next step will require you to work out how many potential customers are based in your target region.

This will require you to do some market research.

To determine your target regions or key distribution channels, consider your specific business context. 

For instance, if you operate a bakery in London, you might want to research the number of households in your area by contacting local authorities or using an online search engine like Google.

Similarly, if you're selling handmade crafts on Etsy, you could look up how many customers purchased items in your category over the past year and estimate the percentage of these customers you might be able to reach. 

Your business plan should also contain a description of your target customers and any distinguishing characteristics they may have, for example, will they likely use your service or buy your product at a certain type of day, or do they all work in the same location?

This information can help you better understand your market potential and plan your efforts accordingly.

The next question you’ll need to answer is why a customer should purchase your product or service? 

Here you’ll need to identify what problem your business is looking to solve for the customer or need your looking to meet.

You’ll also need to explain your pricing strategy including how you arrived at a particular price point and what margin you’ll need for your business to be profitable.

To do this, first consider the costs involved in producing and distributing your product or service, as well as the profit margin you need to break even. 

For example, if you run a cake shop and want to achieve a 20% margin on each sale, and it costs you £4 to make and serve a cake, then you would need to charge at least £5 for your baked goods.

5.    Market and competition

This part of the business plan will illustrate how well you know the market your start-up will operate in as well as the businesses you will compete with for customers.

You should outline all of the market research you’ve conducted which has helped you to understand the market.

A key consideration here are your competitors.

If you're unsure who your competitors are, consider companies offering similar products or services and targeting the same customers. 

It's important to be realistic about this. 

For instance, just because you run a small bookstore doesn't mean a big chain like Waterstones is your direct competitor.

It’s also a good idea to think about where you sell your products or services and what other options are available in that area. 

For example, if you operate a cupcake shop in your neighbourhood, look at other local bakeries or cafes.

Compare factors such as their pricing, product quality, customer service, and packaging. 

Are their prices higher or lower than yours? Do they have longer or shorter wait times? How does their customer service compare? 

Assessing these aspects will help you understand your competitive landscape better.

Once you’ve identified your competitors its worth thinking about what will separate you from them in the eyes of your customers.

This is often called your Unique Selling Point (USP).

It's helpful to identify your strengths (e.g., a strong team) and weaknesses (e.g., a small marketing budget) to focus your efforts on what will be most effective. 

Additionally, being aware of external opportunities (e.g., a new business lead) and threats (e.g., a new competitor in the market) is crucial for future planning and preparedness.

6. Sales and marketing plans

This section of the business plan will be dedicated to how you’ll promote your start-up, and you should list all the different promotional activities you’ll utilise to attract new customers.

Different businesses use various methods to promote themselves and attract customers, but for this section in the Start Up Loans business plan template, we would like to know about three of your most important promotional activities. 

Specifically, we want to understand how these activities help you achieve the objectives outlined in your business plan. 

Structure your response to include:

• what you do: describe the promotional activity
• how you do it: explain the steps or process involved
• frequency: indicate how often you carry out this activity
• expected results: outline the outcomes you aim to achieve with this activity.

If you are already trading and have been implementing these activities already, please provide information on the results you have seen so far to make your response more tangible. 

Be as specific as possible.

6.    Operational plans

This part of your business plan is focused on the specific details around how your start-up will be operated and what its day-to-day running will look like.

When you complete this section, you’ll need to provide the details of two key suppliers or relationships that will be important to running your business.

Regardless of your business type, it's crucial to identify and manage your key suppliers and business relationships to ensure smooth operations. 

If you sell products, you likely depend on wholesalers or other suppliers to keep your business running. 

For instance, a café relies on suppliers for food and beverages.

If your business provides services, certain relationships are vital to achieving your goals. 

For example, a barrister might rely on relationships with solicitors to generate new client referrals. 

Understanding and effectively managing these connections can help prevent disruptions to your business.

Next, you’ll need to outline how many staff you currently employ as well as if you plan to hire more staff within the next year.

It’s a good idea to outline what the role of these staff will be and how they’ll contribute to your business meeting its objectives.

Where your business will operate from should also be added into this section, be that an office, a mobile business, or even at home.

This section should also include a list all of the laws and regulations that govern the industry your business operates in.

The required qualifications and certifications will vary depending on your industry. 

For instance, if you're involved in food and beverage production or service, you will likely need a Food Hygiene certificate and must adhere to specific processes. 

Similarly, if you run a childcare service or tutoring business working with children, you will probably need a National Vocational Qualification (NVQ) or another relevant certification.

If you're unsure about the requirements, consider contacting your industry body or researching online to understand the laws and regulations that may impact your business.

Lastly, you’ll need to tell the Start Up Loans team what insurance you currently have in place or intend to put in place for your start-up.

It is generally advised that all businesses have some form of insurance, and for many types of businesses (especially those with employees), certain insurance levels are mandatory. 

There are several types of insurance available, including professional liability insurance, property insurance, employers' liability insurance, workers' compensation insurance, home-based business insurance, product liability insurance, and vehicle insurance.

In your response, you’ll need to write down the type of insurance you have, who you purchased it from, when you purchased it, the monthly cost, and what it covers. 

If you do not currently have insurance or do not plan to obtain any, you’ll need to explain why and how you will manage in the event of an emergency.

7.    Back-up plan

Often referred to as a ‘Plan B,’ a back-up plan should outline how you will manage your loan repayments if your business and the strategies detailed in your business plan do not go as planned. 

Your business operates in an environment beyond your full control, making it essential to prepare for unexpected challenges. 

As responsible lenders, Start Up Loans want to ensure no individual is overburdened financially. 

Presenting a strong backup plan will give us confidence that you can manage your loan repayments even if faced with unforeseen obstacles.

It’s important that your back-up plan highlights:

• what your loan repayments are
• how you would manage these repayments in the case of an unexpected event
• why you feel this is realistic.

For instance, your back-up plan could involve taking up (or returning to) employment and using your salary to cover loan repayments. 

To make this a realistic option, you need to show that you have the necessary qualifications to secure a job with enough income. 

You can do this by highlighting your previous work experience, relevant skills, professional networks, or connections.

Remember though, Start Up Loans cannot accept relying on your partner’s income as a viable back-up plan.

8.    Supporting evidence

Whether or not you choose to provide supporting evidence depends on the contents of your key business documents, the nature of your business, and the purpose of your loan. 

Any supporting evidence should bolster your claims and help our loan assessment team feel more confident about lending to you. 

For example, if you plan to lease a new premises, you might submit a copy of your lease agreement. 
If you're purchasing a vehicle, you could provide a copy of your driving license. 

While this is not mandatory, your Business Adviser may request additional supporting evidence after reviewing your full application.