It's the moment all entrepreneurs dread. You’ve got a great idea, but can you prove that it will work in practice? A business plan is not just a corporate formality, it’s a test to see if your idea stands up – vital if you hope to convince someone to lend you money – and an ongoing reference point once you’re up and running. So how do you draw up a business plan to ensure that you really will be laughing all the way to the bank?

1. Begin at the end. Before you put pen to paper, think about what you want to achieve. This is the long-term vision for the business. “You need to have a clear idea of where you want to be in three or five years’ time,” says Jon Teckman, a programme director at Ashridge Business School.

2. Talk to the audience. “Don’t write the plan for a scientist when it is going to be read by Aunt Agatha or your bank manager,” says Richard Stutely, author of The Definitive Business Plan. It must be readable, says Peter Harris, co-founder of Hotel Chocolat, a chocolatier. “If you can communicate your idea easily then you’ve also got a much greater likelihood of raising money.”

3. Let it grow. You can start with a back-of-the-envelope idea and work out the details as you go along, Stutely says. “For many entrepreneurs, writing the business plan becomes a market and feasibility study.” However, by the time you have finished the plan, you must know where you are going, he says.

4. Show them the money. “The most important part is income – how you’re going to sell things,” Harris says. “It’s terribly easy to do all the bits about how you’re going to spend money. But if the income part doesn’t stand up then you’re wasting your time.” Teckman says to beware of Dragons’ Den syndrome. “So many people fail because they don’t understand their own numbers,” he says.

5. Be clear and concise. Ten to twenty pages is the optimum length for a business plan, Harris says. “Too long and it becomes demotivating.” Stutely recommends annexing supporting material such as product data or a CV. “The aim is to tell the story succinctly and compellingly,” he says.

6. Put it into context. “This part should lead the reader to understand and believe your sales projections,” Stutely says. Look at market conditions and what your competitors are doing. And don’t be afraid to trust your gut instinct. “If we had tried to research the market for our first business there would have been no evidence to support it,” Harris says.

7. Set out the practicalities. All plans have certain things in common. Harris names “market size, potential customers [and] unique selling points” as details to outline. Others include your management team, employees, premises, resources and risks. Stutely recommends packaging the plan with a one-page executive summary at the beginning and a clear conclusion at the end to repeat the salient points.

8. Don’t go it alone. Many banks offer free advisory services for small businesses. “Asking an accountant or lawyer to check that it’s coherent is a worthwhile investment,” Teckman says. Stutely recommends showing it to a “devil’s advocate”; an honest, trusted acquaintance who can point out the flaws in your grand plans.

9. Watch out for the competition. “The most common mistake I see is people saying ‘this is a new idea and we do not have competitors’,” Stutely says. “Expect your ideas to be copied and plan to stay ahead by being ahead.” You can’t actually copyright an idea, which is why your brand is so important, Teckman adds. Protect it with trademarks or patents and ask third parties to sign confidentiality agreements.

10. The end is only the beginning. A business plan is like a map, Teckman says. Revisit it every couple of months and adapt it as necessary. “If you are exceeding your sales projections, it’s time to raise the bar higher,” he says. “Don’t let it dictate everything you do.”

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