Definition

A business plan is a formal written document setting out a business’s objectives, the strategies and resources required to achieve them, and the financial projections that demonstrate viability. The UK Government’s guidance on writing a business plan describes it as a “roadmap” for the business, serving as both an internal management tool and a communication document for external stakeholders such as lenders or investors.

Why this matters for Business Planning

  • Level 1 knowledge: you must define a business plan, describe its key components and explain why surveying practices need one.
  • A business plan translates strategic intent into operational action; without it, a practice is reacting to events rather than directing its own future.
  • The planning process forces leadership to confront assumptions, identify risks and allocate resources deliberately.
  • The RICS expects regulated firms to be financially sound and well-managed; a business plan is the primary evidence that both conditions are being maintained.

Key principles

Core components of a business plan

Whilst business plans vary in format and detail, most contain: an executive summary; a description of the business and its market position; a market and competitive analysis; strategic objectives and planned actions; a resource plan covering human, financial and physical requirements; financial projections (profit and loss, balance sheet and cash flow); and a risk register. The financial projections must reflect the resource plan, which must be achievable given the stated objectives.

The planning process

Effective planning involves gathering reliable data on current performance, conducting an honest strategic analysis using SWOT and PESTLE frameworks, engaging key stakeholders in setting objectives, and agreeing clear ownership of actions. A plan prepared without input from the team that must deliver it is unlikely to command the buy-in needed for successful implementation.

The plan as a management tool

A business plan that is filed and forgotten has no management value. Its purpose is to guide decision-making: does this opportunity align with the plan? Does this cost fit the budget? Regular quarterly review turns the plan from a static document into an active management tool. Effective practices combine an annual planning cycle with quarterly business reviews at which actual performance is compared to plan and adjustments are made.

Plans for external audiences

A business plan prepared for a bank or investor must use realistic financial projections that can withstand scrutiny and must clearly articulate the risks and how they will be managed. Lenders focus on cash flow; investors focus on growth potential. The obligation under Rule 1 of the RICS Rules of Conduct to act honestly means financial projections must be grounded in evidence, not inflated to secure funding.

Relevant RICS guidance and legislation

  • RICS Rules of Conduct (effective 2 February 2022) — Rule 2 requires firms to be competently organised and managed; a business plan is a core instrument for achieving this.
  • Companies Act 2006 — directors have a statutory duty to promote the success of the company, which requires strategic planning.
  • RICS Regulation: financial viability requirements — regulated firms must maintain adequate financial resources; a financial business plan demonstrates this capacity to the regulator.

Ethics and Rules of Conduct angle

Rule 1 of the RICS Rules of Conduct requires honesty and integrity. This applies directly to business planning: financial projections must be realistic, risk assessments honest, and assumptions disclosed. A practice that presents an optimistic plan to secure investment, knowing the assumptions are not supportable, is behaving dishonestly. Rule 2 also applies: a practice without a business plan makes resource and strategic decisions without a coherent framework, creating risk for clients, staff and the profession.

APC-style Q&As

Q (Level 1)What is a business plan and what is its purpose?

A business plan is a formal written document that sets out a business’s objectives, the strategies it will pursue to achieve them, the resources required, and the financial projections that demonstrate viability. Internally, it provides a framework for decision-making, resource allocation and performance monitoring; externally, it communicates the business’s strategy and financial position to lenders, investors or regulators.

Q (Level 1)What are the core sections you would expect to find in a business plan for a surveying practice?

A business plan for a surveying practice would typically include an executive summary; a description of the practice and its market position; a market and competitive analysis; strategic objectives and planned actions; a resource plan covering people, technology and premises; financial projections (profit and loss, cash flow, balance sheet); and a risk register. The financial projections must be consistent with the resource plan and achievable given the stated objectives.

Q (Level 2)Why is a business plan described as a “living document”?

A business plan is a living document because market conditions, client demand and internal capacity all change over time, making a plan prepared at the start of the year less relevant if it is not updated. Effective practices review their plan quarterly, identifying material variances and adjusting targets, resource allocations or strategies accordingly. A plan that is reviewed regularly remains a useful management tool; one that is not becomes merely a historical record.

Q (Level 2)How does your firm’s business plan influence day-to-day decisions in your team?

(example) Our business plan sets the fee income targets and headcount budget for each service line, cascaded into team KPIs reviewed monthly. When a new client opportunity arises, I check whether taking it on aligns with our service line priorities and whether we have capacity. When a team member requests training, I consider whether it addresses a skill gap identified in the plan. The plan provides the framework within which sensible day-to-day decisions are made.

Q (Level 3)A newly formed surveying practice approaches you for advice on preparing its first business plan. What would you tell it to include and what common mistakes should it avoid?

(example) I would advise including a realistic market analysis; SMART first-year objectives with clear ownership and KPIs; a cash flow forecast covering at least 18 months (cash flow is more critical than profit in the early years); a risk register with genuine mitigations; and a clear resource plan. The most common mistakes to avoid are overstating projected fee income without a supportable client pipeline, and treating the plan as a one-off exercise rather than a quarterly management tool. Under Rule 1 of the RICS Rules of Conduct, all projections shared with lenders must be honest and supportable.