A business plan is a blueprint of how your business is going to look. It is a written document that describes your business's future, and guides you on what you plan to do and how to execute it. A business plan could be as simple as jotting down your strategies for executing a venture on a sheet of paper.
Business plans are always strategic. You begin at a point with certain abilities and resources, and you plan to build them into something spectacular in a space of say, three to five years. Within the period your business plan covers, you are looking at boosting your profit margin and increasing your assets. This step by step growth in business can easily be achieved by having a good business plan in place.
What you need to know before writing a business plan
Before writing a business plan, here are some of the vital things you should know:
How long should your business plan be?
A business plan should not be written as if you are writing a doctoral thesis. It needs to be as short and simple as possible. Just make sure you have a nice projection and great analysis. You can convey your ideas in 20 - 30 pages of text, with another 10 pages for other relevant details such as management resumes, and appendices for monthly projection.
When should you write it?
A lot of people take a business plan to mean “fund-raising tool”. They believe there is no need for a business plan if they are pumping money into their business. This is untrue in so many ways. A business plan helps you monitor the progress of your business, makes you accountable and puts you in full control of its fate. It also serves as a recruiting and sales tool for future investors.
Who needs a business plan?
Every business minded person needs a business plan. A business plan is essential for both start-ups and existing businesses. For a start-up, you need a business plan to help seek funds to start a new venture, while an existing business needs it for expansion. There are professionals who specialize in writing business plans for clients. All you need is to supply them with vital information about the business.
Why should you write a business plan?
Writing a business plan is never a waste of time. Whether you are submitting it to a company to hire you, or you need to grow your business, you must have a plan to present. There are three major reasons why:
For securing funds because you need to present a formal plan to an investor
To help you plan for the future
To keep you accountable for your business’s fate
Determine your goals and objectives
You must take your time to assess the business you are going into, or already running, to make sure it has what it takes for success. You have to think deeply, and envisage where you want your business to be five years from now. Of course, everyone’s objective is to see their business grow, but you need to be specific about what you want, and put that into writing.
Outline your financial needs
It doesn’t always require lots of money to start a business but that can change, especially when you are aiming for rapid growth in your venture. It often happens that energetic, optimistic businesspeople think they can fund and grow their businesses from the sales they make in it. This is rarely true, because in most cases you have to pay suppliers before your customers pay you. This challenge in cash flow is the reason why large businesses seek financial assistance from banks.
Plan what you will do with your plan
If the aim of your business plan is to help you raise funds, then you have to pay more attention to the executive summary, management, marketing and financial aspect. You will need to state clearly how your company intends to make money.
If your aim is to attract talented employees through the business plan, you must focus on the work environment, opportunities for growth and development, stock options, and other areas of compensation.
If your aim is to convince a supplier you are a worthy customer, you will have to show them your past records of repaying trade debts.
Don’t forget about marketing
This is the most crucial part of any business. Without getting your goods or services to customers, your products are useless. You must have good marketing strategies in place to succeed in business. Unfortunately, most business owners lack experience in marketing and don’t know where to start. To make this easy, there are lots of professional freelancers to hire for marketing purposes.
To start any marketing campaign, you must first know your audience, the right message to send to convince them (not just “my product is awesome”), what platform to use for advertising, and then your budget.
Writing a business plan
Now we have got to know the prerequisites of a business plan, let’s look at writing the plan itself.
How to write a business plan
Since you now know why you need a business plan, a good plan should contain the following:
Executive summary: This comes immediately after your title page. It tells your readers what you want. It should be precise and brief.
Business description: This should begin with a brief description of your company. Your description should talk about the present state of the company, as well as future possibilities. Talk about the market in the industry, introduction of new products that will benefit or affect the market, etc.
Market strategies: This can be created after carrying out a thorough market analysis. Understand the market properly to know how to attract great sales
Competitive analysis: The purpose of this is to determine the strengths and weaknesses of competitors. In what way can you take advantage of your competitors, or what areas are you lacking that might cause your competitors to enter your market?
Design and development plan: This is to provide investors with your product’s design and a chart of its development trend
Operations and management plan: This talks about how the business functions on a continuous basis. This covers the logistical aspect of the business such as responsibilities of various teams, tasks assigned to divisions within the organization, and capital & expense requirements pertaining to the operations of the business
Financial factors: This is usually at the back of a business plan, but that doesn’t mean it is less important than other aspects
Updating and enhancing your business plan
There should be monthly and yearly updates on your business plan to assess whether you are keeping up with it or not. You can enhance it along the way if you think there is vital information to include that will help you scale higher.
What you need money for in a business
You need money for licenses and permits, work space, supplies, equipment, operating expenses, association and membership subscriptions, legal fees, employees, freelancers, and contractors. Although the majority of these are needed at some point, you may want to reduce costs as a start-up by being the sole employee, and looking for cheap suppliers.
For you to succeed in any business, there must be a written plan on the ground rules to follow. It helps you track your business growth and makes you accountable for everything that happens. Following the guidelines given in this article will help you draft your own business plan.
If you have other useful tips to share, feel free to drop them in the comment box below.