A business plan is a road-map for a success, it is the main building block for starting up a new business. Business plan is like a guide, briefing your goals and instructing on what you can plan to accomplish those goals. If you have a proper business idea, goals and know the market well for your service or product then it will be very helpful for you to plan your business, in a structured manner.
Business plan need not to be long, official document, though each business has enormous benefits which it can derive from using the business planning process, only few business ideas needs a formal plan document for getting investors or for commercial loans.
Unfortunately, people think of these business plans as necessary only for opening a new business and for applying business loans. However, business plans are also necessary for running your business, whether or not it is required new loans or new investors. Existing business also need to have business plans to maintain and consistently updating the market conditions new opportunities to come.
Business plans also hold the short term and long term goals, expenses and budgets, sales – targets. This is information will be very useful for the growth of your business.
The benefits of making business plan
Not many people bother of writing a business plan because according to them, they think it is very hard or unnecessary, if we’re not looking for funds. These mythologies keep a lot of people away from getting the benefits of business planning. If you’re still doubtful, let’s look at few benefits of business planning:
- Strategy: It’s difficult to stick to a plan through the interruptions and our day to day routine. Business plan can be used to summarize the important points of the strategy, to remind the goals and actions.
- Clear Business objectives: You can use your plan to describe and manage precise calculable objectives like site visitor, deals, margins or newly launching products. Describe success in business objectives terms.
- Refined estimations: You can use your plan to refine all your polished guesses about possible markets, sale, and cost of sales, sale drivers, principal handling and processing your business.
- Priorities: Apart from the strategy, priorities make more sense. It includes priorities for business growth, business management and your financial condition. You can use your plan to set a basis for these, then to review as the business grows.
- Inter-dependencies: You need to understand the inter-dependencies. So, use a business plan to keep the rack of what should be done in what order. For example, if you are planning for a product release, to time a product release, your business plan can help you be on the track for each and every step you have planned for your release.
- Milestones: Milestones should help you to keep you on track. You can make use of your business plan to keep track of timelines and deadlines in a place. This is applicable even for the single-person business and vigorous for groups/teams.
- Delegating: The business plan can be used best clarify for delegation of authority. One person should take charge of every significant task. Your plan can be used to keep track of these things.
- Handling team associates and following the outcomes will be easy: Many people acknowledge the necessity for consistent team member evaluations and as many confess they hate the evaluations. The plan is great for getting things in written form and to follow up on the dissimilarity between expectations and review with course rectifications.
- Better planning and management of cash flow will lead to higher profits. The cash flow plan is a best way to get together the refined guesses on sale, cost, expense and assets you need to buy and debts, you need to reimburse.
You are not required to have big official business plan to gain these benefits. As an alternative, think of a business plan as a group of lists, tables, and bullet points. Think of it as something you need in your day to day life. Having business plan in place will make your life easier.
Business plan outlines –
Business plan outlines a rout a person/organization is willing to take for growth of the revenue. Here are list of things which your business plan should contain.
1. Executive summary:
Executive summary is considered to be an important unit of a business plan. This section briefs the reader about the location of your firm, where you are planning to take it and how your business idea will become successful. If you are looking for funding, the executive summary is your first chance to grab investor’s attention.
In Executive summary, you should highlight the strength of your overall plans. Here are some key facts which the executive summary should contain based on your business.
If your business is well established one:
If you are running an established business, you should include the following info:
- The Mission Statement: This details what your business is about.
- Company Info: it should include a short statement which states the year your business was formed, the name and role of the founders, number of employees, and your location(s).
- Progress Highlights: it should include instances of company growth, like economical or market related highlights (for example, your Firm increased profit and market share over a year by x %). You can use charts and graphs to show these statistics
- Products/Services –Brief about the services and products you offer.
- Finance Information– If you are looking for funding, add information about the current bank and stockholders.
- Summary of future plans– Explain on what level you want to take your business to.
If you are a setting up a Business:
If you are starting a business, you will not be able to portray your business as an established business. As an alternative, you can focus on your knowledge and experience as well as the findings which made you to start this business.
Demonstrate your market analysis. Add information about a necessity or gap in your target marketplace and how your solutions fill the gap. Convince the people that you can be successful in your target marketplace, then brief your upcoming plans.
2. Company description:
This unit of your business plan gives a high-level analysis of the various elements of business. This is similar to an elevator ground extension and helps people and investors understand the aim of your business and its propositions.
What you should include in Company Description
- Define the nature of business and add a list of the market needs that you are planning to fulfil.
- Describe how your services and products meet the market needs.
- List out the specific customers, industries or businesses which you are planning to serve.
- Describe the competitive benefits which you think will add to your business’s success like your business location, skilled employees, well-organized processes or skills, to bring value to clients.
3. Organization and management:
Organizational management goes with marketplace analysis. In this section, you should include: company’s structure, particulars about the proprietorship of the company, outlines of your administration team and the educational details of board of directors.
This unit should comprise of who is on the board and how you plan to keep them in that position. What kind of pay and benefits you have for your employees? What benefits/ promotions are you offering? Assure the people that the employees you have are more than just labels on letterheads.
4. Service/product line:
After organizational management, the next unit of your business plan is where you define your product or service, highlighting the benefits to your customers. Concentrate on how your product fills a need of your target consumers.
In this section, you should include –
- An Explanation of Your service or product, including the information about the benefits of your product to the intended clients
- Information about Product’s Life Cycle- Make sure to add information about the life cycle of your product and the factors which affect its life cycle.
- Add Intellectual Property like any existing patents or copyrights
- R&D (research and development) Activities Highlight any R&D works which you are involved in or planning to get involved in.
5. Sales and marketing:
In this unit of business plan, you should focus on your marketing and sales controlling strategy of your business.
Marketing is nothing but a process of creating clients and consumers are the life of your business. In this unit, the first and foremost thing you can to do is describe your selling strategy. Your strategy should be like a part of a never-ending business-evaluation and unique to each company. Yet, there are some common steps you have to follow which helps you to withstand consumer loyalty.
6. Funding request:
If you are looking for finance for your business, use this unit to summarize your requirements. Funding requests should contain the following info:
- Your present financial requirement
- Future financial requirements over next few years
- How you propose to use the capitals you receive: Is this funding request for capital expenses? Employed capital? Dues retirement? Acquirement?
- Any planned economical situation plans for future, like: buyout, getting acquired, debt payment plan, or selling the business. These are very important to the future, since this directly impacts your capability to reimburse your loan(s).
7. Finance projection:
Once after you analyzed the market, only then, should you create this section. This is how you can make use of resources efficiently. You should include both historical and prospective financial data.
The historical data includes your company’s revenue statements, balance sheets, and money flow statements of every year for up to 3-5 years. On the other hand, prospective financial data is nothing but each year’s forecasted income statement, balance sheet, money flow statement, and principal expenditure.
Standard business plan should cover below given points to make it more effective: Every business plan must have below listed point:
- Cover Page
- Table of Contents
- Executive Summary
- Development and Production
- Resource Requirement
- Format and Presentation
- Writing and Editing