Guides to write a business plan for a service business

A business plan is a written document that sets out the commercial, operational and financial objectives of a business and explains how it's going to achieve them.

To put it simply, it consists of two distinct parts:

• A written part that presents, in detail, your project, the team, your business strategy, and your medium-term objectives.
• A financial forecast that highlights the expected profitability of the project and the funding requirements.

A business plan is a document that sets out your goals for the next three to five years and explains the strategies and actions you plan to take to achieve them.

There are three main reasons to write a business plan for a business operating in the service sector:

• To draw up a roadmap: helps you make informed decisions about how best to allocate resources and ensure long-term success.
• To track financial performance: enables you to regularly compare your financial performance against what was planned in your business plan and adjust accordingly.
• To raise funding: helps you articulate your growth potential and funding requirements, making it easier to secure financing from lenders.

The absence of a business plan is one of the main reasons why more than 50% of new businesses fail within five years. If you are setting up a service business, drawing up a business plan is essential to reduce the risk of your project failing.

The main components of a service business plan follow that of a standard business plan outline:

• Executive summary: provides a concise overview of the business plan, highlighting the key points, financials and objectives of your service business.
• Company description: delivers a comprehensive overview of your service business, covering its vision, legal structure, history, location, and the management team.
• Products and services: describes the services offered by your company, emphasizing their benefits.
• Market analysis: evaluates the service sector, target customers, and competitive dynamics to pinpoint strategic opportunities and threats.
• Strategy: maps out your service business's marketing, sales, and pricing strategies aimed at achieving objectives and outmaneuvering competitors.
• Operations: provides insights into your service business's key assets, suppliers and staffing requirements.
• Financial projections: presents a detailed financial forecast, including cash flow, income statement, and balance sheet.
• Appendix: includes supplementary information such as resumes, legal documents, detailed research, and additional data that support the business plan.

Nowadays, the most efficient way to write an professional business plan is to use a business planning software.

The Business Plan Shop’s online business plan software lets you confidently create your plan without worrying that you've left out a crucial part:

• Our detailed outline includes all the key sections expected in a business plan so you won't have to worry about missing out on crucial aspects.
• Instructions and examples in every section help you power through your plan with confidence.
• Avoid lengthy text by adding images, tables or charts throughout your business plan.

Once you're done, download your business plan as a PDF or Word Document and send it to lenders.

Your business plan serves as a powerful tool to secure funding for your service business by showcasing your vision, market opportunity, operational strategy, and financial projections to potential lenders.

By demonstrating a clear understanding of your industry, a solid plan for growth, and a realistic assessment of funding requirements, you can instill confidence and attract the necessary capital to fuel your service venture.

Here are the three main sources of funding for service businesses:

• Service businesses can secure funding from private investors, venture capital firms, or angel investors. These funds can be used for business expansion, technology upgrades, marketing campaigns, and operational expenses.
• Business loans and lines of credit: service businesses can secure funding through traditional bank loans, lines of credit, or Small Business Administration (SBA) loans to support growth initiatives, operational expenses, and expansion plans.
• Various government grants and programs support service businesses across different sectors. These can include funding for innovation, training programs, community development initiatives, and small business support.

The Business Plan Shop has a range of business plan templates to help you write a business plan to present to investors or lenders.

Most of our business plan templates are examples of companies and entrepreneurs seeking bank loans and so can be used in the same way to structure your business plan!

• Download your chosen template in Word or PDF format (or load it directly into our online business plan software to use as a starting point for your own plan).
• Replace the template’s text and numbers with your business’ details to make it your own.

Here are some of the mostly commonly made mistakes made by entrepreneurs when writing a business plan for a service business:

• Underestimating operational costs: failing to accurately estimate operating expenses, including staffing, marketing, equipment, and maintenance, can lead to budget shortfalls and financial strain, especially during seasonal downturns.
• Neglecting market analysis: not conducting thorough market research on local demand, consumer preferences, and competitor offerings can result in offering services that do not resonate with the target customers or adequately address market needs.
• Ignoring seasonality: overlooking the seasonal fluctuations in demand for certain services can lead to inefficient resource allocation, missed revenue opportunities, and challenges in maintaining consistent cash flow throughout the year.
• Inadequate service delivery planning: poor planning and management of service delivery processes, including scheduling, quality control, and customer service, can lead to client dissatisfaction, negative reviews, and loss of business opportunities.

You should be reviewing and updating your business plan at least quarterly to track your actual performance against what was forecasted at the beginning of the year.

By tracking key performance indicators (KPIs) on a quarterly basis, you can identify any areas of your business which may require a greater budget allocated to them and obtain funding as soon as possible.

You'll also be able to view what's working for your business and what isn't to ensure that your short-term goals and actions are aligned with your long-term objectives outlined in your annual business plan.

The Business Plan Shop's financial forecasting software makes it easy to track your actuals against your forecast to ensure you’re reaching your goals.