All businesses regardless of their nature and scope require business plans. A business plan maps out the way which the business will follow to achieve success. It’s basically a plan that shows interested parties where the business is going and how it will get there. Therefore, a business plan is of utmost importance to all parties involved in business, be it the owners, investors, financiers, and other people who have a direct or indirect interest in it. A business plan in its basic form provides information such as:
- The projected revenue and profit
- Number of employees
- Key locations of the business
- Outlook of the business in specific periods, e. g. after one, three, five, or ten years
One noteworthy thing about a business plan is that it’s never complete. It always needs some revising and reviewing. Some companies choose to review it monthly or yearly. In order to prepare a business plan, there are essential elements that have to be taken into consideration. Thus, this article will consider these elements and how you can write a business plan properly with close consideration of all required details.
When writing a business plan, you should start with an executive summary. The executive summary highlights the important aspects of the entire plan. It is normally what an investor, financier or another party will read first. In some instances, it can be the only part that the aforementioned individuals will read. Hence, it ought to be written properly.
1. Executive Summary
The key point that the executive summary should include is the explanation of the basics of your business and its core operations. It’s normally short and succinct. It summarizes all the sections of the entire plan. It’s typically two pages long.
In order to effectively write the executive summary, make sure you give a vivid description of:
- The business concept
- The business structure
- The market
- The competitive advantage
- Your experience as a director
After the executive summary, the next section is your business strategy.
2. Business Strategy
This section gives information related to:
- The history of your business
- The purpose of your business
- Legal structure
- Overview of all the products and services you will offer.
After this introduction, a description should follow concerning the current position of the company.
Typically, you describe:
- The present position of your company in the business life cycle
- The industry in which the company operates. Under this, you can give finer details related to the industry, like whether it’s stable, its prospects, etc.
- Your achievements so far.
After describing the current position, you can go ahead and describe the competitive advantage that your business has. You can briefly describe your competition and how you stack up against them. It’s here where you tell your investors why your business model is effective.
What follows the competitive advantage is the growth plan. There are three vital things to consider in the growth plan:
- The growth timeline. This is where you tell the readers where you see your business in, say, one year, two years, or five years.
- Key milestones. This is where you tell your readers the objectives that you have set and the time you expect to need for achieving them.
- Set goals. This is where the short term and long term goals are highlighted. A short term goal normally has a timeline of one year while long-term goals have a timeline of about 3-7 years.
You should not forget to include vital information regarding your business in this section. Such information includes:
- Name of the business
- Date of incorporation
3. Marketing Strategy
For every product or service to reach the ultimate consumer, marketing is vital. Marketing involves the activities that an organization does to promote and sell.Your business plan should highlight the marketing plan.
You should tell the readers:
- The price of your product and the pricing mechanism
- How the product or service will get to the final consumer
- How the product or service satisfies the existing market need
- Your plans for promoting the product in order to connect with the target market
- Budget for the whole marketing process
- Customer profiles and their segmentation. For example retail customers, wholesale customers, etc. The segmentation can also be based on age and location.
Of importance in this section is to provide factual information. You have to present information that’s consistent with what’s on the ground. It’s advised that you do a comprehensive market research so that you can make a write-up that’s backed by facts.
4. The Operation Plan
This section provides pertinent information that’s related to the day to day workings of the business.
The basic information in the operation plan includes:
- Day to day hands-on operations: This could include business hours and the likes. Nothing should be excluded.
- Management Information Systems: This could include the tracking mechanisms of things like stock, quality, and also customers.
- Facilities and IT requirements: This includes the location and premises requirements. Concerning IT, you could describe the IT systems that you plan to use and how they will be managed.
5. SWOT Analysis
This is an important aspect of any business plan. You should conduct a SWOT analysis and then dedicate a section in the business plan to it. A SWOT analysis is essential as it enables you to make valid and sound decisions. It also makes you aware of the probable problems that the business might encounter, identifies future business prospects, and enables investors to adequately prepare for them. A SWOT is vital, especially for the investors and key stakeholders in the business. They would want to gauge how you measure your business in terms of strengths, weaknesses, opportunities, and threats. A good SWOT analysis earns you more points as far as credibility is concerned.
6. Human Resource Plan
This section highlights all aspects related to personnel and personnel management. It describes how you will undertake recruitment, training, and how you plan to keep your employees in the long run. In addition, you can include all available positions in the company and brief job descriptions.
7. Social Corporate Responsibility
All businesses have a social responsibility before society. Under this section, you may include how you intend to give back to society.
8. Financial Forecast
This is the section where all numbers and figures are given. The key things to note are:
- Profit and loss projections
- Sales projections
- Cash flows
- Give a vivid description of the figures related to the above aspects.
9. Business Exit and Termination
A time comes when you will no longer be in business. It’s important to plan in advance for this eventuality. Adequately consider:
- When you would want to leave the business
- Process of closure and liquidation
Once you complete the above sections, codify the plan and share it with the interested parties and stakeholders. This will enable them to have an in-depth understanding of your plan. All parties should be given a chance to review it, and thereafter you should make necessary amendments.
Be flexible while compiling it. Subject the plan to constant revision until you have something conclusive.
Always put the plan to use. Do not keep it filed somewhere. In fact, you should refer to it as many times as possible.
When you complete the plan, subject it to the following check-list:
- Is the central business concept valid and sound?
- Does the plan show an understanding of the target market?
- Does the respective industry show growth prospects and stability?
- Is there sufficient financial control?
- Is there capable management?
- Is there room for change and other variables?
It is important to remember that a business plan is an actual representation of your business. Therefore, when writing it, carefully consider the aspects that have been highlighted in this article in order to present your business in the most appropriate way possible.
Guest Author: Richard Nolan is a writer and a private tutor, sharing his experience in spheres of writing, blogging, entrepreneurship and psychology. Richard writes for numerous blogs and gives useful tips for bloggers and students. Currently, Richard works as a general blog editor for ProWritersCenter. Follow him on Facebook