How to write a business plan: a plain UK guide with a worked example

This guide is for people starting a small business in the UK: sole traders, freelancers, partnerships and new limited companies with a handful of people at most. It assumes you have not written a business plan before and that you may need to show it to a lender, a grant panel, a landlord or a business adviser.

It covers what to write in each section, how the numbers in the plan fit together, and what a reader looks for first. One fictional business, a coffee trike run by a sole trader, is worked through from the one-page plan to the cash flow forecast so you can see what a finished plan looks like.

Download the template and the worked example

Who needs a business plan, and how long it should be

No law says you must have a business plan. You need one when somebody else has to decide whether to back you, and it is useful even when nobody does. GOV.UK puts it this way: you will need a business plan if you want to secure investment or a loan from a bank, and it can also help to convince customers, suppliers and potential employees to support you (GOV.UK: Write a business plan).

The length and the emphasis depend on who is reading.

For most start-ups, 6 to 10 pages plus an appendix is plenty. A plan that runs to 30 pages has usually not decided what matters. If a funder gives you a form or a template, use theirs: Start Up Loans, for example, publishes its own template and says you may use a different one as long as it covers similar information (Start Up Loans: business plan template).

Start with a one-page plan

Before writing anything long, answer ten questions in a sentence or two each. If you cannot answer one, that is the next thing to find out, and no amount of writing will cover the gap. If you can answer all ten, the full plan is mostly a matter of adding evidence.

1. What do you sell, and who buys it?
2. Why will they buy from you? The problem you solve, or the reason you are the better choice.
3. Who else sells this, and how do you compare? Include the option of the customer doing nothing.
4. How will customers find you? The two or three ways you will really use.
5. What do you charge, and what does each sale cost you?
6. What does it cost to start, and where will the money come from?
7. What does it cost to run each month, including what you need to live on?
8. How many sales do you need to break even, and when will you get there?
9. What could go wrong, and what will you do about it?
10. What are your next three actions, and by when?

Questions 5 to 8 are where most plans come apart, because they force the words and the numbers to agree. The worked example shows all ten answered for one business, and the one-page plan is the first page of the template.

What to write in each section

The template has ten sections. The order below is the order a reader expects. Write the summary last.

1. Summary

Half a page. What the business is, how much money you need and what it buys, and the two or three strongest facts that show it will work. Many readers decide here whether to read the rest carefully, so use facts and figures in place of adjectives. "41 of the 60 commuters I surveyed said they would buy at least weekly" is stronger than "there is huge demand".

2. The business

Your business name, legal structure and start date, what you sell with prices, where and when you trade, and two or three goals for the first year with a number and a date on each. On legal structure, most people starting alone choose between sole trader and limited company. GOV.UK explains the options (GOV.UK: Set up a business), and our sole trader vs limited company calculator compares the tax on each at your expected profit.

3. You

Your relevant experience, training and qualifications, the gaps in your experience and how you will fill them, and what you are putting in yourself in money and hours. If the trade is new to you, say so and list transferable experience. Start Up Loans gives the same advice to its applicants: previous work in a similar business builds confidence, and if everything is new you should point to transferable skills, life experience and training.

4. Customers and market

Who your customers are, how many of them there are within reach, and how you know. Numbers you collected yourself carry the most weight: people counted, surveys, enquiries, a waiting list, a trial day, pre-orders. Published statistics help to size the market. Your local Business and IP Centre gives free access to market research databases that are expensive to buy, and Nomis publishes official population and employment profiles for every local authority.

Say where each number came from. A reader cannot check "the market is worth millions", but they can check "the council's figures show 2,500 visitors on a typical market day".

5. Competitors

Name two to four real alternatives your customer has, with their prices, strengths and weaknesses, then say why a customer would choose you and what you cannot match. "We have no competitors" is read as "I have not looked". The alternative is sometimes that the customer does it themselves or goes without, and that still counts.

6. Marketing and sales

The two or three ways customers will find you in the first six months, what each costs per month, your prices and how you set them, and sales targets that match the forecast in the money section. A short list you will really carry out beats a long list of every possible channel.

7. Operations and legal

How the work gets done: premises, equipment, suppliers, opening hours, and anyone who will work with you. Then the rules that apply to your trade. For most sole traders that means:

• Tax registration. You can start trading as a sole trader straight away, but you must register for Self Assessment if you earn more than £1,000 from self-employment in a tax year (GOV.UK: Become a sole trader).
• VAT. You must register if your taxable turnover goes over £90,000 in the last 12 months, or you expect it to in the next 30 days (GOV.UK: Register for VAT). Say in the plan whether you expect to be above or below the threshold.
• Licences and registrations. These depend on the trade and the council. A food business, for example, must register with its local authority at least 28 days before trading (GOV.UK: Food business registration). Use the GOV.UK licence finder to check what applies to you.
• Insurance that your trade, customers or landlord require, with a quote.
• Record keeping. How you will track sales, costs and tax from the first day.

8. Risks

Three to five things that could realistically go wrong, how likely and how serious each is, and what you would do. Typical examples are sales building more slowly than forecast, a key customer or supplier leaving, equipment failing, and you being ill. Listing risks does not weaken a plan. A reader already knows the risks exist and wants to see that you do too.

9. Money

Eight short parts: start-up costs, where the money comes from, the price and cost of one sale, monthly running costs, break-even, a 12-month sales and cash flow forecast, what happens if sales are lower, and your personal survival budget. The next part of this guide explains how they connect.

10. Appendix

The evidence: quotes, price lists, survey results, licences, your CV, photographs and the full cash flow spreadsheet. Keep the plan short and put the detail here.

How the numbers connect

The money section is one chain of arithmetic. Each step uses the answer from the step before, so a mistake early on carries through to the end. Work in whole pounds, and note beside each figure whether it is a quote, a price list, your own count or an estimate.

1. Start-up costs. Everything you must pay for before the first sale. Add it up.
2. Funding. Your own money plus any loan or grant. This must be more than the start-up costs. The difference is the cash you open with, and it is your only cushion.
3. What you keep from one sale. Your price minus the direct cost of that sale (materials, packaging, card or platform fees). This is sometimes called the contribution.
4. Monthly running costs. What you pay every month however much you sell: rent, insurance, software, phone, marketing.
5. Break-even. Monthly costs divided by what you keep from one sale gives the number of sales you need each month. Work it out twice: once for running costs only, and once adding loan repayments and the money you need to live on. The second figure is your real target. Our break-even calculator does the division and shows the working.
6. Sales forecast. How many sales you expect each month for a year, with a sentence explaining why. Compare it with the break-even figure: the month the forecast passes break-even is the month the business starts to pay its way.
7. Cash flow forecast. Month by month: money in, money out, and the bank balance at the end. Closing balance = opening balance + money in - money out. The lowest balance in the year shows whether your opening cash is enough. For week-by-week control once you are trading, use our free 13-week cash flow forecast template.
8. The same forecast with lower sales. Cut every month's sales by 20% and see when, or whether, the bank balance goes below zero. Then write down what you would do about it and when you would decide.

Two things are easy to leave out. The first is you: a sole trader is paid out of what is left, so put your drawings in the forecast as a cost. A personal survival budget, which is a list of what you need to live on each month, tells you the minimum. The second is tax. A sole trader's first Self Assessment bill arrives after the end of the tax year and may include a first payment on account towards the next year (GOV.UK: payments on account). It often falls outside a 12-month forecast, so plan to set money aside each month. Our payments on account calculator shows how the January and July payments are worked out.

Profit and cash are different things. A plan can show a profit for the year and still run out of money in month three, because equipment is paid for up front, customers pay late and loan repayments come out of cash. That is why readers ask for the cash flow forecast and not only a profit figure.

Worked example: Tin Roof Coffee

This business is fictional and every figure is illustrative. It is here to show the method. Do not reuse the numbers: your prices, pitch fees, insurance and loan terms will be different.

Asha Patel has worked as a barista and shift supervisor for four years. She wants to run a coffee trike as a sole trader: weekday mornings on a railway station forecourt and Saturdays at the town market, about 21 trading days a month. She has £2,500 in savings and needs a loan for the trike.

Her one-page plan

1. What do you sell, and who buys it?

Espresso coffee, tea and hot chocolate from a coffee trike. Customers are rail commuters on weekday mornings and shoppers at the Saturday market.

2. Why will they buy from you?

There is nowhere to buy coffee on the station forecourt. The nearest café is a four-minute walk in the wrong direction. I am on the way to the platform and serve in under two minutes.

3. Who else sells this, and how do you compare?

A chain café four minutes from the station (average drink about £3.75), a bakery selling filter coffee, and one hot drinks stall at the market. I am closer, quicker and slightly cheaper than the chain.

4. How will customers find you?

Being visible on the forecourt every weekday morning, a stamp card (tenth drink free), and posts in the town's community social media groups.

5. What do you charge, and what does each sale cost you?

Average sale £3.40. Each drink costs about £0.90 in coffee, milk, cup, lid and card fee, leaving £2.50 per drink.

6. What does it cost to start, and where will the money come from?

£8,250 to start. I am putting in £2,500 of savings and applying for an £8,000 start-up loan, which leaves £2,250 in the bank on day one.

7. What does it cost to run each month, including what you need to live on?

£700 of business costs, £249 loan repayment, and £1,300 for me to live on once the business is established. Total £2,249 a month.

8. How many sales do you need to break even, and when will you get there?

900 drinks a month, about 43 a day over 21 trading days. I expect to reach that in month 4 (July).

9. What could go wrong, and what will you do about it?

Sales 20% below forecast: I keep my drawings at £800 and keep my part-time evening work. Machine breakdown: servicing contract and a £300 repair reserve. Pitch not renewed: the market pitch and two event bookings a month as a fallback.

10. Your next three actions, with dates

1. Submit the loan application with this plan and the cash flow forecast (by 15 January). 2. Register as a food business with the council (by 1 March, at least 28 days before trading). 3. Sign the station pitch licence (by 15 March).

Start-up costs and funding

The loan is assumed to be £8,000 over 36 months at a fixed 7.5% a year, which is about £249 a month on a standard repayment calculation. That rate is the one advertised by Start Up Loans when this guide was last updated (Start Up Loans). Check the current terms and use the lender's own calculator for your figures.

One sale, monthly costs and break-even

Break-even, worked out twice:

• Running costs only: £700 ÷ £2.50 = 280 drinks a month. At this level the business survives but cannot repay the loan or pay Asha.
• Running costs, loan repayment and full drawings: (£700 + £249 + £1,300) ÷ £2.50 = 899.6, so 900 drinks a month. Over 21 trading days that is about 43 drinks a day.

Is 900 realistic? Asha counted an average of 610 people entering the station between 6.30am and 9am over six mornings, and sold 68 and 81 drinks on two trial Saturdays at the market. Her target is 35 drinks on each of 17 station mornings and 75 on each of 4 Saturdays, which comes to 895. That means selling to roughly 1 in 17 of the people who pass on a weekday. The plan says this in so many words, so a reader can judge it.

12-month sales and cash flow forecast

Sales start at 500 drinks in April and build to 900 by July. December and January are lower because there are fewer commuting days. Asha takes £800 a month for the first three months and £1,300 after that. Money out each month is the cost of the drinks sold (90p each), plus £700 running costs, £249 loan repayment and her drawings. The opening bank balance is £2,250.

Scroll the table sideways to see every column.

What the table shows: the bank balance never goes below £1,627 (end of May), so the £2,250 opening cash is enough if sales arrive as forecast. Over the year, sales are £34,680, the drinks cost £9,180, running costs are £8,400 and loan repayments are £2,988, of which about £516 is interest. That leaves a profit of about £16,584 before drawings and tax, and Asha draws £14,100.

Income tax and National Insurance are not in the table, because her first Self Assessment payment falls after month 12. Her personal survival budget is £1,150 a month, so £150 of each month's £1,300 drawings goes into a separate savings pot for the tax bill.

The same forecast with sales 20% lower

Scroll the table sideways to see every column.

If every month is 20% below forecast and Asha changes nothing, the balance falls to £105 in August and the account is overdrawn by £244 at the end of September. So the plan includes a decision rule: if sales are below 800 drinks in June, she keeps her drawings at £800 for the rest of the year and keeps two evenings a week of bar work. On that basis the lowest balance is £903 (June) and the year ends with £1,662 in the bank. This table and the paragraph under it are the most useful half page in her plan, because they show a lender that the loan is still repaid in a bad year.

The full plan, with the sections on customers, competitors, operations and risks written out, is in the worked example (Word .docx, 45 KB).

What a lender or grant panel looks for first

Every funder has its own process, so read their guidance before anything else. The points below are general, and they are consistent with what UK start-up funders publish about how they assess plans.

1. The summary. Can they say in one sentence what the business is and what you are asking for?
2. The amount and what it buys. A specific figure, an itemised list and quotes. "About £10,000 for equipment and marketing" raises questions. A table that adds up to £8,250 answers them.
3. The cash flow forecast. Are loan repayments in it? Are your own living costs in it? Does the bank balance stay above zero, and what happens if sales are lower?
4. Evidence of demand. Start Up Loans tells applicants that its assessors want to see that there is a market that wants and needs the product, and that statements are backed by evidence such as a statistic, a customer quote or other research.
5. You. Relevant experience, and your own money in the business.
6. Consistency. The sales target in the marketing section should be the sales figure in the forecast. Readers notice when they differ.

Lenders often want more than the plan itself. Start Up Loans asks for a business plan, a cash flow forecast and a personal survival budget, and says it does not need much financial detail in the plan because the forecast carries it (Start Up Loans: business plan template).

Grant panels usually score applications against published criteria. Use the funder's headings in the funder's order, answer each criterion directly, and show exactly what the grant pays for and what you are contributing. A general business plan is the source material for a grant application. It is rarely the application itself.

Common mistakes

• A sales forecast with no workings. "£5,000 a month" means nothing until it is broken into a number of customers, a price and a reason to believe it.
• Leaving yourself out of the costs. If the forecast only works when you take nothing, it does not work.
• Treating profit as cash. Equipment, stock, deposits and late-paying customers all take cash before any profit arrives.
• No cushion. Funding that exactly matches start-up costs leaves nothing for the first slow month.
• Forgetting tax. The first Self Assessment bill, and VAT if your turnover approaches the threshold, need a line in the plan.
• Claims without a source. "There is strong demand" and "we have no competitors" are the two sentences readers trust least.
• Words and numbers that disagree. A marketing section that promises 50 customers a week beside a forecast based on 20.
• Text that could describe any business. Whether it came from a template, a friend's plan or an AI tool, wording that is not specific to your customers, your prices and your town adds length without adding evidence.
• Too long. Detail belongs in the appendix.
• Writing it once. A plan is a forecast, and forecasts are wrong. Compare the plan with what really happened every month for the first year and update it.

Where to get free help

You do not have to write a plan alone, and you do not need to pay for help. These services are free and publicly funded or charitable.

• England: the Business Support Service on 0800 998 1098, and your local growth hub. Contact details for all four nations are on GOV.UK: Get help and support for your business.
• Scotland: Business Gateway, which publishes its own business plan template and guide, and Find Business Support on 0300 303 0660.
• Wales: Business Wales start-up and business planning guidance, and the Business Wales Helpline on 0300 060 3000.
• Northern Ireland: nibusinessinfo.co.uk, which also explains how to reach free start-up support through local councils.
• Libraries: the British Library's Business and IP Centre network offers free workshops, one-to-one sessions and market research databases in more than 70 UK libraries. Find your local Business and IP Centre.
• Young people: The King's Trust runs a free Enterprise programme and publishes a business plan pack.
• Universities and colleges: most have an enterprise or careers team that will read a draft plan for current students and recent graduates.

Questions people ask

How long should a business plan be?

For a start-up or sole trader, 6 to 10 pages plus an appendix. If a funder sets a word limit or gives you a form, follow that.

Do I need a business plan as a sole trader?

There is no legal requirement. You will need one to apply for most business loans and many grants, and a one-page plan with a cash flow forecast is worth doing for yourself even if nobody else reads it.

What is the difference between a business plan and a cash flow forecast?

The business plan explains the business in words and summary figures. The cash flow forecast is the month-by-month spreadsheet of money in, money out and the bank balance. A lender usually wants both, and the figures in one must match the other.

Can I write a business plan before I start trading?

Yes, and that is the best time. Use quotes, price lists, counts and surveys in place of trading history, and say which figures are estimates.

What if the plan shows the business does not work?

Then the plan has done its job before any money was spent. Try changing the price, the costs, the scale or the amount you need to draw, and see whether a version works. If none does, it is better to know now.

How often should I update a business plan?

Compare the forecast with your real figures every month in the first year, and rewrite the plan when something important changes: a new product, new premises, a loan application or sales well above or below forecast.

Free tools on this site that go with the plan

• Break-even calculator: units, revenue and margin from your fixed costs, price and cost per sale.
• 13-week cash flow forecast template (Excel): weekly opening and closing balances once you are trading.
• Sole trader vs limited company calculator: compares tax and take-home pay at your expected profit.
• Payments on account calculator: the January and July Self Assessment payments.
• Sole trader bookkeeping spreadsheet: a simple record of income and expenses.

Sources and further reading

Every link below was opened and checked on 8 October 2026. Where this guide states a rule or a figure, the source is linked beside it in the text as well.

Official guidance

• GOV.UK: Write a business plan. The government's short overview, with links to templates.
• GOV.UK: Set up a business. Legal structures, registration and what to do first.
• GOV.UK: Become a sole trader. When and how to register for Self Assessment.
• GOV.UK: Register for VAT. The registration threshold and when it applies.
• GOV.UK: Find a licence. Licences by activity and location.
• GOV.UK: Food business registration. Used in the worked example.
• GOV.UK: Understand your Self Assessment tax bill, payments on account.
• GOV.UK: Get help and support for your business. Helplines for England, Scotland, Wales and Northern Ireland.

Business plan guidance and templates from public and charitable bodies

• Start Up Loans: business plan template and how to write a business plan. Start Up Loans is part of the British Business Bank. Use its template if you are applying for one of its loans.
• Start Up Loans: cash flow forecast template.
• British Business Bank. Guidance on types of business finance and how to prepare for them.
• The King's Trust: business plans and templates. A business plan pack, template and financial tables.
• Business Wales: Making a plan. Step-by-step guidance with a checklist.
• Business Gateway (Scotland): business plan template and guide.
• nibusinessinfo.co.uk: Write a business plan, step by step, with a downloadable template.
• British Library Business and IP Centre and its toolkit for start-ups.

Market research data

• British Library Business and IP Centre: market information. Free access to commercial market research in participating libraries.
• Nomis: local authority profiles. Official population, employment and business counts by area.
• Companies House: find company information. Free filed accounts for competitors that are limited companies.

About this guide

Published by Digital Adaption. Written by Matty Hatton. Last updated 9 October 2026.

This is general guidance for people starting a business in the UK. It is not financial, tax or legal advice, and it cannot take account of your circumstances. Rates and thresholds are quoted from the linked sources as they stood on the date above. If you find an error or a broken link, email matty@digitaladaption.co.uk and it will be corrected.

You may link to this page and share the template and worked example freely. There is nothing to buy and nothing to sign up for on this page.

Digital Adaption is a UK consultancy that works on business data, reporting and spreadsheets. If you need that kind of help later on, you can contact us here.