A business plan is a document, a roadmap, if you will, outlining your business’s long-term and short-term goals. Aside from presenting your mission and vision alongside products and services, a plan must include the means needed to achieve them.
Companies of all shapes and sizes can benefit from a business plan. It can be used internally and externally when seeking funding.
The structure of a business plan depends on each company’s specific needs. Still, there are some ground rules every organization should follow to create a document that fulfils its purpose.
Two Types Of Business Plans
Most companies opt between a traditional and lean business plan.
A traditional business plan is a comprehensive document, usually a couple dozen pages long. Crafting such a document requires more time, resulting from in-depth research and analysis of every segment meant to be included. A traditional business plan is a preferred option when investors are involved.
On the other hand, lean business plans are great for internal use. They usually fit one page. A lean business plan is like a short version of a traditional plan, summarising key business elements.
The Benefits Of A Business Plan
Creating a business plan is never easy. A business plan helps businesses to safeguard the future. Without a well-planned plan, a business enterprise will not be able to compete in the long run. A business plan contains the probable spending, targetted revenues, allocation of resources, acquisition of resources, new policies, and others. It is highly helpful from the point of view of a good learning experience. Therefore, as an individual, you have to ensure you are successful in planning the future course of your business organization.
Forecasting The Future Steps
One of the benefits of a business plan is forecasting the business plan. It provides the business entity an idea of whether the business enterprise will be able to run with profits in the future. The naysayers will point out that the business plan provides an incomplete, partly vague picture. But there is no doubt that a business plan provides the most valuable set of information to the entrepreneur.
Business Plan Is Necessary For Acquiring Credit
A well-framed business plan is a high necessity when it comes to acquiring credit from banks. The banks want your business plan if you approach them for business loans. Most of the banks will not even entertain you if you fail to project the business plan. With the help of a business plan, the bank wants to check out how organized you are to prepare for the imminent challenges.
One of the major challenges of the business is resource management. It is really difficult to understand what you must buy to set the new budget.
Another advantage of the business plan is to allocate resources. It ensures you don’t overspend to meet your financial year requirements. Besides these vital points, a financial plan’s other key benefits are understanding the competition, securing talent, remaining in the structure, and others.
What Makes A Good Business Plan
Whether you opt for a traditional or lean business plan, pay attention to the following:
- Clear language: Regardless of the scope of your business plan, you want to share your message clearly and concisely. Use short yet detailed sentences with as little jargon as possible. Still, consider using business terminology where it makes sense, especially if creating a plan for investors.
- Brand elements: A business plan is another excellent tool for building brand identity. Aside from printing a logo on the front page, consider using your company’s colours when creating tables or graphs or highlighting specific sections in the document.
- Research: The success of your business plan will depend on the time and effort you put into research. Stakeholders will expect projections and forecasts based on accurate and relevant information.
Key Sections Of A Business Plan
A business plan usually covers:
Since the executive summary is the first segment that readers will come across, it must grab their attention, motivating them to continue reading the rest. The executive summary includes:
- Your mission and vision
- A short description of your services or products
- Financial goals
Here, you want to define your business structure, informing the readers about whether your business is run as a corporation, partnership, or sole proprietorship. List your company’s registered name and address.
Market (And Competitive) Analysis
You must understand the market you are operating in and show it in your business plan. Provide data showcasing your marketplace’s current trends and state and how you fit in it. Also, define your competition and what differentiates you from them. Here’s where you present your value proposition.
Presentation Of Product And Service
Present your products and services’ main functionalities as well as how they could grow. Also, explain the production process, including the time and means used.
Introduce Your Team
Present your leadership team, highlighting their expertise. Showcase the current number of employees and your hiring objectives.
Marketing And Sales Strategies
When discussing a marketing strategy in a business plan, first define your ICP (ideal customer profile), the channel they mostly use, and tactics you’ll use to communicate with them. Also, list the resources needed to achieve it and how you will measure success.
Similar to a marketing plan, you want to familiarise stakeholders with your sales strategy, explaining the processes, tools, timelines, and parameters for measuring success.
What this section looks like depends on whether you are an early-stage or established business. Either way, these are usually long-term projections.
As an established business, in addition to the request for funding, you will have to provide cash flow and income statements, as well as balance sheets. As an early-stage business, you’ll have to define how much funding you need, how you plan to spend it, and when you expect to generate your first profit.
Additional tip: You can use an appendix to attach documents you could not fit into a business plan, such as bank history, licenses, patents, resumes, contracts, etc.
Aside from being an excellent tool for attracting investors, a business plan helps you grow your business, enabling you to define your strengths and weaknesses, analyze market and competition, and refine your value proposition, setting yourself up for long-term success.