Millions of new businesses are launched on a daily basis into the market – both offline and online. From sneaker stores to boutique, accessory websites to accounting firms among several others. On top of it all, business planning should be the first step in creating a secure future for your business. This would lead me to define what a business plan is…
What is a business plan?
A business plan is simply a written description or an outline of your business’s future. It is a roadmap that indicates what you intend to do and the way you plan to do it.
Why is a business plan important?
In a simple clear term, a business plan provides precise clarification of your business’s vision both to your customers and employees. Additionally, it offers a system to measure the results of your business and also provide the basis for future growth plans.
Why do I need to prepare a business plan?
A business plan is usually prepared in order to acquire financing for a business and to help determine if the most important elements of starting a business have been taken into consideration. It is a plan to try to convince someone else that you know what you are doing with your business. If you can have a plan for yourself and family, nothing should stop you from creating one for your business.
Who needs a business plan?
Several times I have heard people say they don’t need a business plan for their small business. I want you to get it clear. As an aspiring entrepreneur and regardless of the size of your proposed business, it is important you prepare a business plan if you are serious about the proper planning of your business.
Advantages of creating a business plan
Keeping your business ideas in your mind is a sure way to forget it easily and most times, you forget forever. However, preparing a business plan allows you to:
- Document what you know and have the permanent impact of writing it down
- Engage in key strategies that will help you manage your thoughts
- Apply a clear-cut process to preparing a business plan
- Think deeply about your business objectives and goals.
- Be clearer about your business and also be accountable.
- Help you to focus on your business intentions.
Disadvantages of not having a business plan
There are several disadvantages of not having a business plan. A few include:
- All your ideas will remain in your brain with the possibility of forgetting it.
- Your plans only remain as ideas and you cannot raise funds for your proposed business.
- There will be no clarity regarding the funding amount needed as well as how to successfully run the business
Basic Steps Involved In Writing A Business Plan
Now you need to understand the basic
steps involved in creating a business plan. Outlined below are the basic steps
in writing a business plan
Executive Summary: This is the first step involved in writing a business plan. It includes the entirety of what you would cover in your business.
Here, you will need to explain the fundamentals of your proposed business, like:
- What your product or service will be
- Who your customers will be
- What you think the future holds for your business and your industry
You will need to make it professional, enthusiastic, concise, and perfect. If you are applying for a loan, clearly state the amount you would need and how you are going to utilize it. Do not forget to include details about how the loan will make your business more profitable, thus ensuring timely loan repayment.
Business Description: Under this section, you would need to write a short description of your proposed business plus the general description of your business’s industry. Prepare the business goals, philosophy, mission statement, and objectives, as well as its legal form of ownership (whether it is a corporation, sole proprietor, limited liability Company etc.). Describe in details:
- The strength and core competencies of your proposed business
- What you think your major competitive strengths will be
- What factors will make the business succeed
- What strengths, background, skills, and experience you would personally introduce to this new venture, etc.
Marketing Strategy: The next step is to prepare your marketing strategy. This is very important for your marketing plan as it helps you justify your sales forecast. Therefore, be sure your market strategy is relevant to setting up the practicality of your proposed business as well as the rationality of the sales forecast.
Location: The location of your business is as important as the business plan itself. Even though areas with higher traffic may cost more to rent/buy, they are cost-effective for advertising to attract customers. For an online business, it is important you go into details of how you will attract prospective customers to your site.
Competitive Analysis: Virtually no business is new in this present competitive market. If there are no competitions for your business, beware as there may be no market for your product or services. Your competitors may not really be direct, but you must put it into consideration, give it a thorough analysis and look for ways to stand out.
Risk Assessment: What weaknesses are embedded in this venture? What impact will these have? What susceptibilities face this type of venture? What emergency plans are in place? Are there any new technologies that may affect your business in the next 1 to 3 years? What level of liability insurance is required? …You must ensure everything is covered.
Operations and Management: One of the leading causes of business failure is poor management and operations. It is therefore vital to talk about management qualifications and structure. If your proposed business will be having few principals and rely on service outsourcing, you will need to list these important people and their qualifications.
Workforce: The success of your business relies solely on your ability to employ and retain experienced staff members employees.
Projected Financial Statements: Projected financial statements are very helpful in preparing a business plan, but may not be essential. In this section, you will need to estimate the financial impact of those techniques by developing likely Balance Sheets, Income Statements, and Cash Flow Statements.
Summary Section: This section is not for new information, but to buttress the information you have earlier provided. Discuss the financial statements of the principals involved in your business including any other information you think an investor would like to see.
A Business plan for traditional brick and mortar business versus online business
For obvious reasons, writing a
business plan for a traditional brick and mortar business will probably take
lots of time. This is because you would need to conduct a thorough research
before a business plan can even be developed. For most online business startups,
on the other hand, the detailed and in-depth planning involved with a
traditional business is not required except you are trying to combine
traditional business and online business together. However, it would still be
beneficial if you have a well-written business plan in front of you as this
will help you focus on important aspects of your business.
Summary and Conclusion
According to the former U. S. General and President, Dwight Eisenhower, plans are useless but planning is indispensable. A well written business plan can also be a major benefit to your success as well if done right. It can guide you and keep you on track and can be the vehicle to get you where you want to be particularly with many outside forces these days that surround you.
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