A Business plan describes the rationale of how a business venture creates, delivers and captures value in economic, social and political terms. A business plan is a whole lot more than some written or drafted document. Its major function is to help you in stating out, and achieving the goals you have set for your business.
Situations where a business plan comes to play is when you intend on starting a business or plan on pitching your business idea, a well laid out business plan gives you a better chance at success.
The business plan is the DNA of the business; it influences and determines decisions and strategy for branching, marketing, sales, relationship, communication, etc.
It is a very important management tool that helps you analyse results, make strategic decisions and give a blueprint on how your business will operate.
You should not for any reason jump into a business without a carefully prepared business plan. This will save you a lot of headache in the long run. You need your business to have all the key benefits a business plan provides.
A business plan is not so complicated to put together. You will see step by step how to put your plans together.
HOW SHOULD A BUSINESS PLAN LOOK LIKE?
Here is a step by step view on how your business plan should look like.
- Executive summary: The executive would contain the opportunity and expectation of the business.
- Opportunity: This contains the problem summary, solution summary, market summary, competition, overview and why us?
- Expectation: This should contain your Forecast, Financial highlights by year including the charts), Financing needs
- Opportunity: This should contain the problem and solution, target market, competition.
- Problems and solution: You have to highlight the Problem worth solving, and the solution your business is proffering to the problem.
- Target market.
- Competition: What are your current alternatives and what are your advantages
- Execution: This is how you plan to make it work.
- Marketing and sales: Give your marketing plan and your sales plan
- Operations: give the locations and facilities that you want to operate from, Technology, equipments and tools needed to execute all of plan.
- Milestones and metrics: Put in a Milestones table, and key metrics.
- Team: This includes the management team and advisors.
- Financial plan:
- Forecast: This includes the key assumptions, revenue by month [chart], expenses by month [chart], Net profit or loss by year [chart]
- Financing: In here you write the use of funds and sources of funds
- Statements: The projected profit and loss, projected balance sheet and projected cash flow statement.
- Monthly financial forecast
- Additional documentation.
ADVANTAGES OF A GOOD BUSINESS PLAN
A business plan sets the pace for a lot of things in your business and doing it right at the inception is very key in achieving success and facing whatever challenges may come along the way. Here are the benefits of writing a business plan especially if you want to start a strong and sustainable business.
A business plan is the foundation of your business
A well written business plan is a solid rock foundation for your business. It means you have highlighted all of the key things needed for your business to grow fast. A business with a very strong foundation is a business that is built to last. You are not predicting the future, but you are working with the core strategy for your business to grow. The initial business plan does not have to be perfect; it can always be reviewed and changed to better suit your goals. A business that starts out without a business plan will find it quite difficult to track its progress; make adjustments where needed and would not have the historical data to make necessary decisions that would move the business forward. It is a blueprint of where you are coming from and where you are going.
A business plan shows you are ready to get things done.
Someone with a business plan is taken more seriously by loan providers or investors. These people would not just give their money to anyone; they want to be sure they are putting their money in the right place and with the right people. No one wants to invest in a business that has no trajectory. Your business plan helps to prove that you have a solid understanding of the direction your business is going to. While pitching or trying to get funding for your business, you need to have the right financial statements, forecasts, and an understandable explanation of your business model at the disposal of your financiers as this helps them to know that there is a sustainable and attainable need for the solution you are providing. A business plan helps you to put all of these together.
A business plan helps you make strategic decisions
The decisions you make in your business have significant impact on the overall performance of the business. All of these decisions are usually made when there external crisis, volatility, growth and decline, etc. During these periods, you need to make decisions that have huge consequences very quickly. If you do not have an up-to-date planning and forecast information, these decisions would be considered frivolous and can cause a huge blow on the business. However, if you have a written business plan that you update from time to time, you can make confident decisions because you have all of the information you need to know if they are the best move or not.
Bear these in mind while writing your business plan. Keep it as short as possible. You want your business plan to be read not shoved aside. It must be written in a way that what is there is understandable at first glance. Avoid writing a 100 page business plan; no one is going to read that. Keep it simple.
Finally, know your audience. If you are presenting your business plan to an investor especially if the details are not in his or her field, make it very understandable. Avoid writing things that would be too complex to understand. Read more!