Saturday, 04 February 2012
Do You Really Need to Write a Business Plan?
The Importance of Having a Business Plan
A well thought out business plan is essential for any new business ventures not only to procure credit or other financing,
but most importantly it will help keep you focused & committed to your success plan...
So to answer the question "How to Write a Business Plan?"...
How to Create a Business Plan
You may also ask "Why Do I Need a Business Plan?"...
Well not only is a business plan the holy grail in terms of the future success of your business, it is also an essential requirement when it comes to
raising funding, investment capital or forming strategic partnerships with people or companies.
Although, you may have a complete picture of the business in your head, a written business plan demonstrates to investors and bankers
that you have a complete understanding of your business' short, medium & long term vision in all respects.
10 Steps to Create Your Complete Business Plan
- What Should Be In the Plan & How Long Should It Be
A business plan is really just a written description of your business's future in terms of sales, profits, capital investment, operting overheads, growth
and so on.
Therefore the length of the plan will depend on the size & complexity of the business and the detail of the plan - for instance the business
plan for a lemonade stand will be significantly shorter than that for a motor car dealership.
As they're often used by entrepreneurs seeking funding, they need to convey their short, medium & long term vision to potential investors.
So in a nutshell your business plan should include your business goals,
the strategies you'll use to meet them, potential problems that may confront your business and ways to solve them, the
organizational structure of your business (including titles and responsibilities), and finally, the amount of capital
required to finance your venture and keep it going until it breaks even.
- What Type of Business Plan
While business plans tend to have a lot of elements in common, such as marketing plans & cash flow projections as well as sharing
certain fund raising objectives, there isn't just one type of business plan model that will fit all types of businesses.
Depending upon the type of your business and what you intend to use your plan for (you may just want to use the plan to raise funding),
you could well need a plan that differs significantly to the plan needed by another entrepreneur.
Furthermore plans differ widely in their length, appearance, the content and the emphasis placed on different aspects of the business.
Various types of business plans could include the following;
- A Mini Plan - this could consist of just a few pages including key aspects such as the business' concept, financing requirements,
marketing plan & projection as well as financial statements.
Whilst a mini plan can serve as a valuable prelude to a future full length & detailed plan, it's a great way to quickly test a
business concept or measure the interest of a potential partner or investor.
- A Working Plan - while this plan should contain a lot of detail it can lack a certain amount of presentation quality or formality as it
is actually a tool that can be used by you or the executive to operate all aspects of the running of your business - it can be viewed as
the management and financial blueprint for a business.
- A Presentation Plan - as this is the plan that you would need to procure funding, for example, it would need to be formally structured so that
it is presentable for showing to bankers, investors and other parties outside the company.
- Mission Statement
The mission statement should be a brief but clear & succinct statement of the enterprise's purpose for existence.
Furthermore it should include meaningful and measurable criteria to do with the enterprise's public image, its target market,
products & services, the geographic reach and expectations of growth and profitability.
For instance it could be along the lines of Wal-Mart's mission statement as follows;
"To give ordinary folk the chance to buy the same thing as rich people"
- Assess the Potential of Your Business
Its important to know whether your type of business actually has the potential to deliver the results you desire - in other words
whether the venture you have your heart set on is really likely to fulfill your dreams, for instance a lemonade stand isn't likely to
put you up there (financially & socially) with the Donald Trumps of this world.
In more realistic terms many business ideas never make it past the planning stage because their creators,
during the planning process, test their goals & objectives and find them wanting.
It would probably be helpful to test your idea for financial soundness, ie to determine whether it really makes financial or economic sense,
and the impact it will have on your lifestyle, ie a business that needs your attention 24/7 may not be what you want even if it is financially sound.
- Executive Summary
This summary should follow the title page of the outline of the business plan and not be buried somewhere else in the business plan.
It needs to be short, concise and clearly state the business' intentions & requirements in the case of a loan request.
The main elements found in this summary include the business concept, financial considerations, current business position,
growth projections as well as cash flow statements & projections.
- Goals & Objectives
This is one of the most important steps in creating the business plan as if you do not know what your business should achieve in the short to long term
you won't know how to achieve it or get there.
So you will need to clearly define what you want to achieve with your business and ensure that these goals are measureable &
set to specific time frames.
Objectives will need to formulated for each facet of your business including sales, profits, costs, growth etc.
- Sales & Marketing Strategy
Analyzing the market will force the entrepreneur to become familiar with all aspects of the market so that the business' target market can be identified &
defined and the entreprise can be optimally positioned to capture its share.
Performing an analysis of the target market also enables the entrepreneur to establish pricing, distribution, promotional strategies, as well as
identify growth potential, that will allow the company to be both competitive & profitable.
Once the size of the target market, in terms of sales revenue & volumes, has been determined your share of the market needs to be projected.
Whilst this market share projection is pretty much a subjective estimate, industry growth and conversions from the existing market users
will have to be considered.
Market research can provide valuable data that can be key to the success of the entreprise.
- Competitive & SWOT Analysis
This competitive or business analysis is to determine the strengths & weaknesses of the competitors within your target market,
and provide you with the information that you will need to formulate strategies to ensure your business' survival & prosperity.
A SWOT analysis is also a useful exercise to perform during this phase of your business plan and is
designed to analyze your own Strengths, Weaknesses, Opportunities & Threats
- Planning
- Design & Development Plan
In the development plan product development, market development & organizational development need to be addressed.
Based on structure and goals, each of these elements needs to be examined from the funding of the plan to the point where the
business begins to experience a continuous income.
Included in this phase of the business plan or the following;
- Procedures - Procedures will have to be developed for product development, market development, & organization development and include
how resources will be allocated, who is in charge of accomplishing each goal, and how everything will interact.
- Scheduling and Costs - This includes all of the key work elements as well as the stages the product must pass through before customer delivery.
- Development Budget - This budget needs to account for all the expenses required in designing the product and to take it from prototype to production.
These costs will include material, direct labor, overhead, support function costs, marketing & sales, professional costs, capital equipment costs.
- Personnel - Costs in terms of resourcing the business with the appropriate competencies in terms of personnel needs to be planned for.
- Assessing Risks - Potential risks to the business should be addressed & planned for to alleviate the impact of these perceived risks on the business.
- Management & Operational Plan
The operations and management plan is designed to describe just how the business functions on a day to basis as well as into the future.
This will focus on the logistics of the organization such as the various responsibilities of the management team,
the tasks assigned to each division within the company, and capital and expense requirements related to the operations of the business.
- Financial Plan
Not only is the financial data important for astute investors who will scrutinize the charts, tables, formulas and spreadsheets in the
financial section, but is important for the entreprenuer as that this information is like the pulse of the business that needs to be checked continually
to ensure its successful survival & growth.
- Measuring
As all your goals & objectives are measurable its important that you measure & monitor the results
regularly.
If you find that certain goals are unachievable or unrealistic you can always adjust them but keep them within the business' overall vision
& mission statement.
Related articles;
5 Reasons You Need a Business Plan
PS.
For your new or established business, you can get all the information you need from this ebook to
write your business plan here »
