A business plan is a foundation for every business undertaking. Whether it is setting up a new small enterprise or working towards its expansion, a carefully thought-out and articulated business plan helps in putting together all the components of achieving the set objectives. This document doesn’t just capture one’s dream, but also helps investors and prospective partners see the business sense and the potential growth of the business.
Business Plan: Definition
A Business Plan is a more formal and widely accepted definition, which does not only describe the goals of the venture but also explains how these goals could be achieved, outlining the time frame and the funds required. It is a schema for the business, assisting in organizing the business concept, target audience, financial expectations, and business activity.
For the most part, a business plan has the following components:
Executive Summary:
This is a brief description of the business, its mission, products, and primary financial figures. It is the first thing the reader sees and contains, in essence, all of the plan.
Business Description:
This subsection contains a description of the business that is thorough in nature, that explains a history of the business, its chosen organization structure, its location and geographic coverage and that of the industry it is a part of.
Market Analysis:
Similar to a business strategy, you assess the various factors that influence the market you want to focus your operation on. Determining the relevant customers, competitors and trends in the relevant consumption industries.
Organization and Management:
This section of the plan explains the arrangements and hierarchy in the business, ownership information, and the management team as well as the board where relevant.
Products or Services:
A summary of the product or service to be offered, its benefits to the existing and potential customers, and the forecast of that products or services life span.
Marketing and Sales Strategy:
Outlines the strategies to be adopted in marketing the products or services and selling them. Summarizes the go-to-market approach.
Financial Projections:
This is an important section to investors. This section provides comprehensive financial forecasts comprising income projections, cash flow projections, and even balance sheets. A break-even analysis is likely to be incorporated.
Funding Request (if any):
In case you require funding, indicate how much you need, how it will be allocated and your terms.
Appendices:
This is the area where extra information like resumes, license, lease, and any other relevant document is usually provided.
Why is a Business Plan Important?
Defining Your Vision: The process of creating a business plan will seek to compel you to define your objectives and how they will be achieved. It assesses the viability of your entrepreneurial proposal including the consideration of issues requiring more thought.
Attracts Investment:
If you are looking to fund your business through external investors or banks, progress will also require a business plan to show that the business is worth investing in. Otherwise, without a solid plan, it is improbable that one will receive the funds needed to launch or expand operations.
Guides You to Make Decisions:
In its silent way, a business plan helps as an internal management control tool which helps in decision making and keeping in focus the purpose of the business. It enables one to take stock of the course of events and the achievements of targets as against set expectations and take corrective actions when necessary.
Provides Structure:
With a business plan, you can define the goals and targets, delegate duties, and create principles to assess your performance.
Reduces Risks:
By undertaking market and competitor analysis, it is possible to devise ways to overcome the identified challenges and even picture the worst that can happen without the risk occurring.
How to Write a Business Plan
Research the Market: Before going ahead to put pen on paper, make sure you have sufficient information on the market and competition as well as the potential clients. This will enable you to come up with possible objectives and strategies.
Identify the Business Concept:
What is it that is different about the product or service that you offer? How does it address a shortage or need? This is what should be addressed in the business plan.
Develop the Financial Strategy:
Financial strategy is also a crucial consideration in making a business plan. This should consider creating a budget, sales projections and how much time before the business breaks even. Investors would like to understand your profit-making timeline and strategies.
Prepare a Summary:
Even though its this section that comes first in the business plan, it is most likely done at the end. The executive summary is a brief review of the entire plan and grabs the readers attention within seconds.
Ask for Critique:
After you have composed the business plan, request for critique from any of the mentors, associates or industry professionals you can access. This will assist in filling the blanks or correcting mistakes.
Typical Blunders to Avoid While Business Planning
Being Excessively Helpful with Financials: Investors tend to shun projects with unrealistic financial projections. Make sure your forecast has sufficient research and realistic premises.
Overlooking Other Players within the Market:
It is a common pitfall to misread or ignore the existing market players. Indicate in the plan how you view the competition and how you intend to position yourself against it.
Incomprehensibility:
To begin with, a business proposal is and ought to be brief simple and comprehensible. Refrain from using complex language or long pointless explanations.
Generalizing:
Due to the fact that the rest of the sections are filled out, this section appears to be unimportant. However, it is essential to revise the business plan in order to incorporate new developments business wise, environmentally, or in terms of competition.
Summary
It is undeniably true that a business plan is not a tool meant merely for investors rather it serves to control the course of a business. It enables one to concentrate, put in place structures and come up with plans for successful operations in the long term. A good business plan is one of the things that you need most when starting a new business or expanding an already existing business because it will make it easy for you to solve the problems and utilize the chances in the environment.
