Starting a business is an exciting venture. To make it an absolute success, getting all the details right from the very beginning is absolutely crucial. This is where a business plan becomes relevant.
A business plan is a formal statement that comprises the goals of a business, reasons why they are attainable and the ways in which these can be accomplished. In short, a business plan is a road-map to success.
It is important to understand that while a business plan may not make success inevitable for a business, it can definitely help you identify viable ways to avoid failure. It helps you get a clear understanding of the strengths and weaknesses of your business and devise ways to capitalize on the strength and minimize the risks.
Parts of a Business Plan
Regardless of whether you are starting a business or planning to grow your existing one, a business plan is an absolutely crucial element. Let’s take a look at what to include while craft a winning business plan.
An executive summary briefly outlines the goals and objectives of the business. It summarizes a description of the business, the products and/or services provided, growth potential, funding requirements, a proper plan on how you will repay loans, if any, etc.
Sometimes, you might require to show the business plan you formulate to investors and financiers. Therefore, you should ensure that you get to the to-the-point in the summary.
Description of the Business
This is where you introduce readers to the business. Describe the products and services that your business plans to provide and where and how you plan on providing these to your potential customers. By now, you would need to have a clear idea about which industry corresponds to your business and who your target customers are going to be.
Also include, an industry analysis and how your business fits in. It should also comprise an outlook for the future. Include how further developments in your industry may affect your business and add facts supporting your inferences.
Analysis of Market Opportunities and Competition
A thorough market research is crucial for your business. This research should analyze the buying habits of customers, purchasing cycle, their willingness to accept new products and services etc. In short, you would need to determine whether there is a viable market for the products and/or services your business will offer.
Also, it is important to have an idea about your competitors and what works for them. These findings will help you determine how to differentiate your product or service from the existing ones. The strategies you devise for this purpose should be included in your business plan.
Marketing and Sales
This section should comprise a layout of your marketing plan. One of the primary purposes of this section is to find ways to spread awareness of the products and services among your target customers. Marketing involves advertising and promoting your products while maintaining proper public relations.
Your plan should include the techniques that you will implement to generate leads, increase conversion and retain customers. These should be actionable and based on facts.
Business Operations and Management
This section is dedicated to how you plan on running the business. This may include requirements related to staffing, logistics and development of the business. Also, the tasks assigned to every division, responsibilities of the management team etc. are included. Some other aspects that you need to consider are infrastructure, working equipment, WiFi requirements and so on.
You should keep in mind that the operations will change as the company grows. Therefore, your business plan should have provisions for these changes.
The success or failure of a business boils down to its profits and this section will help in planning how to keep it steady. The major aspects include:
• An income statement comprising the sources of the business’s cash generation
• The cash flow statement determining how you plan on meeting financial obligations
Additionally, the business plan should be inclusive of proper funding options for expansion and growth.
Even with a full-fledged plan, there can still be certain areas that can go wrong. Your business plan should include strategies that you will implement in case things don’t go as anticipated. This could include a shift in marketing strategies in case the desired results are not obtained within a specific time, change in product focus etc.
While this is a basic structure of a business plan, you can include variations depending on the type of business. The benefits of a business plan are endless. A well-drafted plan is crucial in driving your business towards success.
Manager Photo via Shutterstock
What I did when I first started writing a business plan is work with a template. As I get more used to it, it is easier to do without the template.