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Definition Of A Business Plan

A business plan is a written document that explains in detail how a business (usually a startup) defines its objectives and outlines its goals and how the business plans to achieve those goals over the next three or more years.
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Primarily, your business plan should convince you that your idea makes sense before appealing to another because your time, your money, and your effort are on the line. Therefore, a good business plan should be a blueprint for a successful business. Preparing a business plan might be a bit tedious, however, below is a well-detailed guide to preparing a great business plan:

Title Page And Content

A good business plan should be presented properly in a binder with a cover that lists the business’s name, the principals’ names and other basic information like a working address, phone number, email and web address and date. The company logo should be included and a table of contents that follows the executive summary.

Executive Summary

This is a concise outline of the company’s purpose and goals, the mission statement along with any information about the company’s leadership, employees, operations, and location, and should include:
  • A review of company objective.
  • A high-level validation for feasibility.
  • A picture of growth potential.
  • Funding requirements.
Your executive summary should be as concise and yet detailed as possible, so if your Summary cannot clearly describe, in one or two pages, how your business will solve a particular problem and make a profit, then it’s likely the opportunity does not exist or is not well developed.

Overview And Objectives

If you already own an existing business, summarizing your current operation should be quite easy; it can be a lot harder and tricky when you are still in the planning stage of the business. You have to identify:
  • What you will provide.
  • What you need to run your business.
  • Who will service your customers?
  • Who your customers are?

Products And Services

In the Products and Services section of your business plan, you will clearly explain the products and services your business will offer. Always bear in mind that highly technical descriptions are not necessary and definitely not recommended, use simple terms in a way that your customers can relate to easily. Key questions to answer:
  • Are your products or services in development or already existing?
  • What makes your products or services different from others?
  • Is price a problem for your customers?
  • How will you get your products? Do you produce them yourself?
  • Do you purchase products from suppliers or wholesalers?
  • If your business takes off, will there be a steady source of products?

Market Opportunities

A good business plan analyzes and evaluates customer demographics, purchasing habits, and eagerness to accept new products and services. These questions will serve as a guide to analyze the market opportunities for your business:
  • What is the size of the market?
  • Is the overall industry rising, stable, or in decline?
  • What demographics and behaviours make up the market you plan to target?
  • Is the demand for my products and services on the increase or not?
  • What are your customers expected to pay for my products and services?

Sales And Marketing

Key questions to answer in order to analyze your sales and marketing activities:
  • What is your financial statement for sales and marketing efforts?
  • How will you determine if your initial marketing efforts are successful? If they are not successful, what plans will you fall back to?
  • Will you need sales representatives to promote your products?
  • Can you create public relations activities to help market your business?
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Competitive Analysis

The Competitive Analysis section of your business plan is dedicated to analyzing your competition (existing and potential) who might enter your market. Here is a simple process you can follow to identify, analyze, and determine the strengths and weaknesses of your competition.
  • What are their strengths? (Their prices, services, and general record).
  • What are their weaknesses? (Opportunities you intend to take advantage of)
  • What are their fundamental objectives?
  • What promotion strategies do they use? Look at their advertising, public relations, etc.
  • How will they respond when you enter the market?

Operations

The operations plan will emphasize the logistics of the organization such as the diverse responsibilities of the management team, the tasks assigned to each division within the company, and capital and expense requirements related to the operations of the business. Key questions to answer:
  • What facilities and equipment do you need?
  • What are your primary staffing needs?
  • How will you create business relationships with customers?
  • How will your operations change as the company grows?
  • What steps will you take to reduce costs if the company primarily does not perform up to expectations?

Management Team

Do you have key leaders? What are their experiences, educational backgrounds, and skills? What duties will each of them perform? (What responsibilities are expected in each position)? What is the salary structure for the company?

Financial Analysis

Financial projections tell you whether your business has a chance of being viable or not. Most business plans include at least five basic reports or projections which includes: Balance Sheet: This describes the company liquidity position including assets, liabilities, shareholders, and earnings retained to finance future operations or funds for development. Income Statement: This Profit and Loss statement shows projected revenue and expenses. Cash Flow Statement: This shows how and when cash will flow through the business. Operating Budget: A detailed breakdown of income and expenses. Break-Even Analysis: A projection of the revenue that shows when a business can become profitable.

Appendices

You may decide to include, as backup or additional information:
  • Resumes of key leaders.
  • Additional descriptions of products and services.
  • Legal agreements.
  • Organizational charts.
  • Product Photographs.
  • Additional financial documents.
Creating an Appendix is usually necessary only if you’re seeking financing or hoping to bring in partners or investors. The idea behind business plans is for financing purposes; help people who are unfamiliar with your business understand it quickly and attract talented employees. However, it is also important for your business edification as well, and it is highly advised that you update your business plan when conditions of the business change, nevertheless, the key is to keep your business plan ready and handy when opportunities strike. Featured Image Source: Kudi Konsult
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This article was first published on 3rd September 2021

grace-christos

Grace Christos Is a content creator with a proven track record of success in content marketing, online reputation management, sales strategy, and so much more.

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