Experts say that a solid business plan is a sure step in the direction of success. So what is a business plan in the first place? It is defined as a document that describes the functional and financial objectives of a company. It also contains details of the budget involved and the goals to be achieved.
Everything on earth tends to become compact. Gone are those times when a sea beach could be described with a thousand words. Today, a similar description is possible with a powerful image and a series of strong adjectives in just a few words. A mobile phone today is a little bigger than your thumb. Similarly, a business plan is no longer a hundred page document. Nobody wants to know about your business. They want to know your views, your goals, your objectives and your plan of action.
How well can a business plan be implemented?
o Simplicity of a business plan: does everyone understand it? Are your views and goals clear?
o Specificity of a business plan: are the contents measurable? Are all activities dated (from start to finish)? Are all actions clearly distributed among staff?
o Real nature of a business plan: are the objectives and goals real? Are the objectives set within a given time achievable?
o Completeness of a business plan: is the plan complete? Do you have all the necessary elements to outline your business objectives?
A business plan has multiple uses. It can be used to start a new business venture, apply for a loan, or find good investors. There are many other reasons why you need a business plan. First you need to figure out why you need a business plan.
Why do you need a business plan?
o Outline objectives and set goals to achieve them
o Prepare regular trade review schedules
o Start a new business venture
o Decide on the value of a business for sale and legal issues
o Outline agreements between trading partners
If business plans are designed for different purposes, there must be different business plans for different types of businesses. Business plans are also known as growth plans, internal plans, investment plans, etc.
If your business plan is for internal study and review, there is no need for background details of your organization because you already know them. You should add that only if your business plans are intended for banks and other institutions.
What are the different types of business plans?
– The most basic business plans are start-up plans that clearly outline the steps for a new business venture. They include details of the service provided or product offered, its market value, implementation strategies, market and financial analysis. The basic structure consists of a summary of the company, ending with details of financial transactions and expectations for the first year.
– An operational business plan contains details of dates, deadlines and milestones. It is often referred to as an internal business plan.
– A strategic business plan aims at higher levels of objectives and does not deal much with dates and deadlines. This business plan is more future and growth oriented and less focused on company facts.
– A growth or expansion business plan focuses more on one or more subsets of the business. There are variations of this type of business plan. If it is intended for a new investment, it will obviously include the background of the company.
– A feasibility business plan is your entire business in bullet points. It includes the company summary, mission and vision, USP of the business venture, expected financial results, etc. The main objective of this business plan is to test whether it is worth starting this business.
The Seven Points of Business Plans
Business plans usually cover the following 7 points. Of course, they will vary in detail, depending on the purpose of the business plan.
– Mission Statement: Your business plan should clearly explain why you want to start a particular type of business in the first place. It doesn’t have to be long, but it should get the message across clearly.
– Business Description: This is the place where your business is discussed. What are you trying to sell or provide? What is the USP of your business?
– Goals in sight: Here, you outline your short-term and long-term goals. Short-term goals may include your plan to acquire office space, provide a suitable business name, apply for a business license, etc. Long-term goals include answers to where you see your business ten years from now, opening new stores, etc.
– Potential customers – Who is your target audience? Why will they need your service or product? How well do you understand their needs?
– Competitor Analysis: This helps you to rank your business company in the market. Who are your competitors? If your focus area is too competitive, try a niche market that is comparatively less competitive.
– Financial Considerations: Be realistic and optimistic about your finances. Make sure you only spend the amount you’re sure you’ll get returns on. Or, get a small business loan until your business can take care of its own expenses.
– Marketing: sell your ideas before selling your products. Advertise your products everywhere you can think of. Don’t miss out on offline and online advertising. If you have the opportunity, showcase your product or service in local communities and organizations.
Business Plan Do’s and Don’ts
Your business plan must:
a) Establish specific goals and deadlines
b) Distribute work among people and departments and set deadlines to achieve objectives
c) Maintain a consistent implementation to strategy ratio of 10:1
d) Provide a platform for regular review and discussion.
Your business plan must not:
a) Show your knowledge about your field of expertise
b) Being too long: people lose interest easily
Not all businessmen and women are good planners. Many times it has been seen that a business fails due to the lack of a good business plan. That is one of the cardinal mistakes of an entrepreneur.
Errors in the business plan
Experts have identified some common mistakes regarding business plans. They are:
– No business plan: Many business ventures start without any plan. Plans are written quickly only if clients, banks or investors request the same. It is often considered unnecessary because the business is more important. Imagine the condition of a house without a blueprint. You will get lost half way in piles of concrete and steel. In the same way, you will lose yourself in the ideas and desire to implement them.
– Cash is more important than profit – business is not the same as profit. Cash is the main player. Only if he has cash to spend at the beginning will he make a profit at the end of the day.
– Ideas don’t sell – your business sells thanks to hard work, perseverance, cash and a lot of common sense. Your idea does not have to be brand new. Old wine is better than new. Because? People rely on age and experience.
– Fear factor: a business plan is as necessary and as routine as making a travel plan. You don’t have to be Einstein to draw up a business plan. You just need to think clearly and write down your thoughts.
– Specificity wins: Focus on tangible results, instead of trying to be the best. Results matter and they tell you everything.
– Suit all business plans: Your business plan should work for bankers and investors, as well as internal reviews and corrections. Do not make individual business plans for individual purposes. Rather, focus on your business.
– Not everything can be important – you can only have a few priorities. 20 priorities are vague and clearly show the lack of strategy and objectives.
A business plan is the first step in starting a business. It is not easy or difficult. What is a business plan about? How is a business plan implemented? What do you include in a business plan? What are the ‘must haves’ and ‘don’ts’ of business plans?
Whether it’s traveling, studying, cooking or any other activity that involves a process, planning is often the first step. The same is true for business. Business plans are probably more important than the business itself. For example, the plan of a house is more important than the house itself, even though it is the house that people remember and not the plan. But the house wouldn’t hold up without the blueprint, would it?