Thinking of writing a business plan? Regardless if you’re searching for investors. I believe that entrepreneurs should dedicate time to create business plan, because it serve as the framework for your company and provide benchmarks to see if you’re reaching your goals.
Points to Note
As with most things in the business world, the size and scope of your business plan depend on your specific goals. If you’re drafting it for investors, you should make the plan more detailed. Be sure to keep in mind that potential investors might not be as familiar with your industry so you have to clearly explain your concept and where it fits in. If you’re just developing the plan for you and/or business partners, it doesn’t have to be as detailed, but you should still outline your goals and how you want to reach them.
According to Entrepreneur Magazine, a typical business plans is usually between 15 to 20 pages. Broad business plans have three parts: business concept, marketplace and financial; and these are broken down into seven components that include the overview or summary of the plan, a description of the business, market strategies, competition analysis, design and development, operations and management, and financial information. Whether a simple or comprehensive business plans, they have importance and purpose for the success of the business.
Importance of Business Plan
What I’ve learned as a coach and real live management is that it’s important to outline your business plan carefully. Consider all the variables so you don’t rush into anything and test your assumptions.
You should take some time to work with mentors, business partners, and colleagues on your plan. Ask them to look for holes so you can adjust accordingly. Seeking input is a great way to get an objective view, hence business plan serve the following purpose.
The key purpose of a business plan is to outline what the business is or what it aims to be over time. Defining the set objectives and goals of your business enables you to understand what needs to be done for commercial success. This can consist of a simple corporate image of your business and its products or services, or it can specify the exact product and services lines you’ll offer to the market, and of course meticulous description of your ideal customer.
When a venture is established and at times there is a need to adjust due to changes in economic environment and laws. Also in anticipation to take advantage of future growth and direction. An effective and functional business plan can be an ideal method to plan for changes in the market, growing or slowing trends, and new innovations or directions to take as the company grows. Although clarity in the business plan lets you know where you’re starting, future vision allows you to have a definite goals to your aim to attained.
To Attract Investors
Whether simple or comprehensive a good business plan shows whether or not a business has the potential to make a profit. This is done through accurate data and statistics, facts, figures and detailed plans in place. In most cases, a viable and new business has a better chance of attracting investors to provide the capital needed for getting started.
Instrument to Attract Partner
Business plans can be designed as a sale tool to attract partners, secure supplier accounts and attract executive level employees into the new venture. Business plans can be shared with the executive candidates or desired partners to help convince them of the potential for the business, and persuade them to join the team.
A business plan conveys the organizational structure of your business, including titles of directors or officers and their individual duties. It also acts as a management tool that can be referred to regularly to ensure the business is on course with meeting goals, sales targets or operational milestones.
Component of Business Plan
In preparing business plan seeking partnership or for potential investment in your company, here are ten business plan component as outline by Patrick Hull:
- Mission statement and/or vision statement so you articulate what you’re trying to create;
- Description of your company and product or service;
- Description of how your product or service is different;
- Market analysis that discusses the market you’re trying to enter, competitors, where you fit, and what type of market share you believe you can secure;
- Description of your management team, including the experience of key team members and previous successes;
- How you plan to market the product or service;
- Analysis of your company’s strengths, weaknesses, opportunities, and threat, which will show that you’re realistic and have considered opportunities and challenges;
- Develop a cash flow statement so you understand what your needs are now and will be in the future (a cash flow statement also can help you consider how cash flow could impact growth);
- Revenue projections; and
- Summary/conclusion that wraps everything together (this also could be an executive summary at the beginning of the plan).
For Small Scale Business
Note that the above points are to give a clear guard to the planner, assuming it is for a small scale business. If the plan is for business leaders and partners, the following format may be adopted:
Executive Summary: Your executive summary is a snapshot of your business plan as a whole and touches on your company profile and goals. Read these tips about what to include.
Company Description: Your company description provides information on what you do, what differentiates your business from others, and the markets your business serves.
Market Analysis: Before launching your business, it is essential for you to research your business industry, market and competitors.
Organization & Management: Every business is structured differently. Find out the best organization and management structure for your business.
Service or Product Line: What do you sell? How does it benefit your customers? What is the product lifecycle? Get tips on how to tell the story about your product or service.
Marketing & Sales: How do you plan to market your business? What is your sales strategy? You should consult financial expert to get an insightful input.
Funding Request: If you are seeking funding from the bank, it is ideal to get the service of a competent account to structure out a convincing repayment plan.
Financial Projections: If you need funding, providing financial projections to back up your request is critical. Get professional help to know the appropriate information you need to include in your financial projections for your small business.
Appendix: An appendix is optional, but a useful place to include information such as resumes, permits and leases. You need to get all the additional information from relevant government agencies.
Please feel free to comment and suggestion for area that needs improvement.