What is a business plan?
A business plan is an indispensable written document that includes a description and overview of a company’s coming future. It is a document that will describe in detail how a business defines its objectives and will carry out its trading activities to achieve its goals.
A business plan will be created based on the intended audience and the nature of the business. The purpose of it is to help identify, outline, and study a business opportunity, examining its technical, economic, and financial viability.
Why do I need a business plan?
A business plan is much required since it can help one determine if his/her business idea is feasible and possible to act successfully. The plan should describe the business strategy and its key goals to successfully climb up the business ladder facing obstacles and challenges favourably.
It is of no use if one begins a new venture if there is little or no chance that the business will be successful so it’s always best to lay out a business plan which will help figure out the chances of success for the business.
What should my business plan include?
1. An executive summary
An executive summary is the overview of the entire business plan and should concisely highlight the most crucial parts of the plan. The executive summary is more than just a general outline of the business plan, the facts summarise that one will be explaining in detail.
In the executive summary, you have one paragraph to mention the facts discussed in all other sections of the plan. Then, include information on the required amount of funds, investment benefits, and advantages of the business over other competitors. This section can consist of about one or two pages.
Potential investors of a business will first go through the executive summary, and then decide whether to continue reading the rest of the document or not. If they decide to not continue reading, you will be losing your potential investors. Therefore, the executive summary must be attractive and written in an interesting style. It should be short and describe the concept of the business.
2. A company summary
The company summary can be presented under several sub-sections. These could be a general and overall description of the nature of the business, the structure of the business, business aims etc.
Depending on the nature of the business, you may also present information such as the location, service facilities, history of the business, details of the commencement of business etc. What is essential to include here is the main reasons for the success of your business. Greater weight should be given to what you intend to do in future, rather than what you generally do.
3. Business description
Information on the goods or services offered by your business is included here. This section describes how your product meets the market needs.
Further, it should explain why your product should be bought, how your product differs from the competitive goods/services available on the market, and the special and unique features of your product. You should also describe the special benefits that your customers can gain from your product and elaborate on its value for money and superior quality when compared to competitive products.
However, all of this must be an honest and genuine description. In addition to the above, you should also explain how you are organised to achieve them. For instance, you must include information on the type of organisation, organisational structure, sources of financing, whether you are issuing (or have already issued) shares or debentures, etc.
4. Market and industry analysis
This section elaborates on the market needs and wants. Information on the market size, the number of potential and target customers is included here. You will have to use various assumptions such as potential market, potential sales and income when doing the market and industry analysis.
This requires information obtained through research, from competitive businesses and experienced businessmen. You should obtain the assistance of experts in this regard. When making long term estimates that is for 3-5 years, scientific research methods should be used. The industry growth rate should be analysed both at the national level as well as the international level.
Market and industry analysis should describe the strengths and weaknesses of your competitors, as well as how you would overcome them. Give a truthful description of the products, prices, and services of your competitors, and how yours would surpass them.
5. Marketing Strategies
If nobody would buy your products, you will have to close down your business. Nothing ends a business faster than having no customers.
In this section of the business plan, you should explain what you intend to do to attract customers. What are the strategies that you would use to let people know that you are in business?
You should explain the distribution methods as well as promotional strategies.
6. Operational Plan
This section should describe in detail the production processes, machinery and tools, the required level of production, licensing, adhering to national and international standards etc.
The number of operations employees required in the first year and how this requirement would grow in the subsequent development stages should be elaborated.
7. The management team/HR team
Here, you should provide information on your managers, their qualifications, experience, and strengths. The person holding the key management positions should be introduced separately. It is better to include the CVs of the management team in the appendix.
8. Financial Plan
This section should include the actual financial investment required. You also have to explain how and when you intend to pay back this amount. Through this section, it should be clear to the investors how much money they should invest, what benefits they can obtain, and how long it will take to receive the money back. The break-even point should also be indicated. Further, you must include the following as well:
- Income Statement
- Balance Sheet
- Cash Flow Analysis
A business plan is seen as an essential strategic tool that assists many businesses to reach their short-term and long-term targets. It is therefore of vital importance to ensure that your business plan is all-inclusive and attractive to investors and other interested parties.
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