Business planning is a vital part of creating a stable and successful business. Without a proper plan to implement while running the enterprise, a possible successful business can fail within days. Starting a business is like learning a new skill or language. Everyone wants to be the best but most of them do not wish to put in the required amount of effort in understanding the fundamentals and learning to walk the ropes. Most growing businesses wish to implement a plan that pulls in investors right away. Although, the initial funding provided by investors are a great way to kick-start a business they are never the solution.
If the investment is not properly challenged and utilized, then all the investors in the world cannot help the enterprise. A business plan should be written in a way that properly describes the path the business should take in its journey towards success. A business plan needs to be comprehensive and should have all necessary and relevant details.
How to Write a Business Plan
Generally, a business plan is comprised of five sections. But it’s common to come across business plans which may have more sections.
1. The Executive Summary
This section simply outlines the basic and necessary information about the enterprise. This section is the most crucial part of the document and will contain information such as the nature and objectives of the enterprise. The enterprise’s organization, management and plan for marketing will be described in brief here.
2. Business Concept
This section mainly deals with details like enterprise name, address, description and so on. Other information will include the idea behind the enterprise and why and how the business is better than the competition.
3. Marketing Strategies
This section will contain the analysis and research conducted in the market. It also acts like a detailed marketing plan. The demand of services or products, pricing schemes and the current trends in the related industry are some of the necessary information this section should contain.
4. Financial Data
The financial section will contain all information regarding the financial aspects of the business. The funds available and required, projections of income and profit, statements regarding cash flow are some of the items required here. It should be very comprehensive and contain all related documents.
5. Management and Operations
The management section will simply contain information regarding the management team like their resumes. Most importantly, this section of the business plan should include how you will conduct your business on a day-to-day basis. It should clarify the various key responsibilities of the management team and each department that your company will have.
Why You Need a Business Plan
Business plans act as maps for the organization. They guide the enterprise into a better and successful future. There are a number of ways in which business plans help in the running of a prosperous company.
A good manager knows that objectives are vital to success. Creating a list of objectives helps the management team to know exactly what is expected of them. A business plan contains the aims of the company and therefore, managers find it easier to visualize their goals. They can, therefore, make better organizational decisions to make those aims a reality.
Displacement is one of the most important concepts in business. It’s a practical reality which can have tremendous effect on a small business. Unfortunately, many might not have heard of it. Any decision taken by a business implies that there were other options which were not opted for. This is the basic idea behind displacement. An effective business plan should be able to handle displacement.
As time passes, a business will grow. With it comes the question of hiring new people, renting extra space, acquiring newer assets and so on. A good business plan will provide an idea on how to tackle each of these issues efficiently. The plan will tell you how much investment is actually required in these areas at a given point of time. Certain assets might not prove to be as valuable in the long run as they seem at first. A clear plan will help differentiate between the really necessary investments and the unimportant ones.
Alliances are a vital aspect of business. Forging good relations with others can help increase the growth of an enterprise. A business plan is a great way to communicate with other people and inform them about the company. The plan itself will give an idea about the alliances which will be beneficial for the success of the enterprise.
Simply put, valuation is the method for determining the worth of a company or a business. The valuation expert can provide a plethora of information like the current and possible future worth of the company. They’ll be able to tell when and why the company will be of a certain value. Possible cost and production values can also be reasonably communicated by a professional in such matters. Valuation itself is beneficial for financial and legal reasons amongst others.
A business plan is not just for attracting funds, but it presents a detailed plan to determine a course of action for your company’s overall success. The vision of the entrepreneur is contained within the business plan. It completely describes the aims and goals of the company along with the time-frame within which it wishes to achieve those goals. It should be based on thorough market research using conservative values. While writing a business plan, therefore, you should always focus on creating a road-map which explains where you want to take your company and how you’re going to get it done.
Does your company have a business plan that you’ll follow to achieve your ultimate goals? Please feel free to leave a comment below.