What is a Business Plan?
A business plan can be defined as,
“A document or forecast plan describes the purpose and objectives of a business/company, its strategies, description of products and services, target market and financial forecast”.
Importance of a Business Plan in Strategizing Efforts
Many of you will raise the question ‘Why should I write a business plan’? The answer to this is simple. Just as a builder cannot start constructing a building without a blue print similarly, an eager businessman should not rush into new venture without having a written document in hand.
Advice for Drafting Business Plans
Make sure your business plan is realistic and provides a roadmap for future. It should by dynamic so that you can modify your strategies according to change in business environment.
Remember a business plan is like curriculum vitae of your business and serves to attract investors as well as keep customers and suppliers informed about performance of your company.
Writing a Business Plan
Now that you have decided to start up your own business, it is essential that you pen down a plan which you are going to follow through the course of your business.
Types of Business Plans
Business plans are normally formatted for the following categories in a business:
- Marketing Plan: A marketing plan elaborates on the marketing strategy in effect, in plan or proposed to increase sales, exposure or brand recognition.
- Sales Plan: A sales plan explores new vendors, sales operations, joint options and sales mechanisms to increase sales and revenue.
- Strategic Plan: A strategy plan broadly encompasses any efforts or ideas which are targeted in changing, revising or incorporating some new mechanism or technique in a business strategy.
- Financial Plan: A financial plan analyzes the credit and debit facilitations of a business along with future stock options, joint ventures, investment portfolios and financial operations.
Format of a Business Plan
A business plan typically consists of the following standard elements.
Two to three pages highlighting the main features of entire business plan make up the section of executive summary. It is advised that you write this last. Learn how to write an executive summary for an effective business plan.
Company Description: Mission Statement
It describes the history of your company—how the company was formed, who owns it, an outline of its business model. This section also discusses in brief about your channel strategy (who sells for you and how product or services are delivered to your customers). Also mention any awards and achievements so far.
A business mission statement specifically defines the goals, objectives and long term and short term vision of a business. Learn how to write a business mission statement for a business plan.
Describe what you’re selling so far. Focus on customer benefits and why do they buy from you. If your products/services have not been offered in the markets so far then mention the information on a proposed basis.
You need to know your market, customer needs, where they are, how to reach them. Who are your current customers and why do they buy from you. Who else solves the same problem? How are you different from your competitors? If your products/services have not been offered in the markets so far then mention the information on a proposed basis.
Describe long-term direction of your business, which markets should your business compete in and what kinds of activities are involved in such markets?
- (Markets; scope), how can the business perform better than the competition in those markets
- (Advantage)? What resources (skills, assets, finance, relationships, technical competence, and facilities) are required in order to be able to compete
- (Resources)? What external, environmental factors affect the businesses’ ability to compete
- (Environment)? What are the values and expectations of those who have power in and around the business
Risks and Mitigation Plans
It includes vulnerabilities of the business, what would make it not work, what will be outside your control? What are your mitigating plans to handle the risks?
For e-commerce, include discussion of website, development, operations, sales and marketing strategies. For non web-related business it is the discussion of what you need to run your operations such as infrastructure, supplier selection processes, delivery processes, accounting methods and practices, auditing, customer management, etc.
Describe the organization and the key management team members. Who are the key players and what new players will be needed.
In this section, include at the very least your projected Profit and Loss and Cash Flow tables. You need to include at least a 3-5 year profit and loss and cash flow statements.
Here you need to tell about your company’s future plans e.g. expand by bringing in a strategic partner, merge with another company, sell the company or go for IPO (Initial Public Offer).