We live in a fast-paced world where it has become quite easy to start a business due to easy access to information and technology. Gone are the days when it took months and years on end for a business idea or concept to materialize.
Today, business dynamics are changed due to the influence of innovative technology and changing consumer needs and preferences. Previously, many resourceful and financially strong individuals used to gather around and develop a business company.
However, in recent times we have seen many young and aspiring entrepreneurs launching a startup with little resources and then using their creativity and modern technological solutions to establish their business. Big capital and investment are always used to drive business but always hard to get.
But nowadays, if you have recently graduated and have a brilliant business plan, then it is fairly easy to gather the investment to launch a brand.
What is a Business Plan?
The first thing that may come to your mind with a ‘business plan’ is some document that is needed to establish a business company. Well, it is a document but not one where you write the rules and goals and forget about it.
You may have seen it in the movies and television series, young business graduate scribbling and writing buzzwords on the back of napkins. Well, a business plan is not that as dramatic as depicted in the movies.
In short, a business plan is a blueprint or comprehensive guide that outlines your goals and the steps you may follow to reach those goals. A business plan is like a roadmap that helps you navigate and find your way with the help of information and direction. Without a roadmap, you will get lost, and it will require both time and effort to find your way again.
The important aspects of a business plan are
- Overview of your business strategy,
- Milestones to track tasks and responsibility
- Financial projections that define your expenses, cash flow, sales, and revenue
Most people think that business plans are for first-time startups, loan applications, or graduating business students. This is not true as startups, and even existing businesses can also take advantage of a business plan. A business plan for any business usually changes with time as the business progresses and grows, and you may set new directions for your company.
A venture capitalist or investor will want to analyze your business plan and only make an investment commitment once they are convinced by the business plan. Most of aspiring young business graduates and entrepreneur ask where to get a business plan for my business, well there are few consulting firms that provide all the help you need to form an effective business plan.
Why is a Business Plan Important?
A business plan is essential to determine the set of guidelines and policies you need to implement to achieve your goals. Nearly every potential businessman wishes to not only fulfill the needs of consumers in the best of manners but also grow business and secure a regular revenue stream.
A business plan can be an internal document that you have to show to the founding members and employees of the company to help them understand the vision and goals. The business plan is also important to gather investment as you have to show it to potential investors, future employees, and possible business partners.
Listing down all the operational and financial details helps to ensure that nothing is left out. Often, an important aspect may be overlooked in a hurry, and then a strategy has to be revised. For example, budgeting is a crucial step for a startup business, and you should list down
- Target market
- Unique Selling Proposition (USP)
- Pricing strategy; and
- How to deliver products or service to the customers
A business plan is a roadmap that can help you launch your business and help to overcome challenges and obstacles, and most importantly help you get a business plan funded to ensure long-term growth and success.
What to include in a Business Plan?
A business plan does not have to follow a ‘one size fits all formula.’ It can be as long or as short as you want it to be. You have to define your goals and strategies and change them when new data comes in. The document can be 10 pages long or even a couple of pages.
Experts suggest that shorter and more concise business plans are the best way to communicate and track your vision and goals. You may be asked to give a piece of more detailed information about your business if you have to apply for a loan from a bank. But it will be easier once you have the basic elements in place. A typical business plan includes
- Overview or Executive Summary
It is the basic understanding of what your company will do and the structure of the company. You have to write the name of the company and the address. One of the important features is the ‘Mission’ which is the driving force of your business plan. You also need to define different functions of the company, such as Marketing & Sales, Operations, and Finances.
To make your business a success, you need to clarify the context or message you want to communicate to potential customers. It would be best to highlight the need or problem customers are facing and how your company can solve them. The key is to emphasize why potential customers may buy your product or use your service instead of the competitors.
- Market Analysis
You need to first research and define the ‘Target Market’ according to demographics (age, income, residence, gender) and psychographics (interests and wants). You may also have to estimate the size of the target market. Some of the important details to highlight are visibility of the brand, lead generation, and conversion or sales strategy.
- Products and Services
This section will include the physical product you may offer to the customers or service. You may offer dozens of products or service, but you should focus on the primary product to center the marketing efforts. You may briefly mention all the products and services and what value those may bring in the consumer’s life.
In many of the business plans that you may have come across, one common aspect is ‘projection’, including sales projection or market share projection. Launching a startup or managing a small business may make it tough to make accurate projections, so instead, it is better to set goals.
The best way is to plan for 1-year goals first and then 3 year or 5-year goals soon as the business progresses. Some of the factors to consider in the goals are sales, revenue and profit, brand impact on the market, and growth and development of the business.
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The Importance of Writing the Steps of Business Plan
The first step is to determine which sector your business will fall in and if it will be feasible or not. Having a business plan helps to know if the business activities and goals are attainable or not. The success or failure of a business plan is revealed in the competitive analysis stage. In case of failure, you may have to change the business idea or refine your original business plan.
The best way to make your business idea a success story is to perform extensive research. Fortunately, we live in a world where there are several tools to know exact details about the market, competitors, potential customers, preferences, and changing market trends.
The more you research, the more information you have and more likelihood of taking off the business from the start and then settling in and growing at a steady pace.
How to Write a Business Plan Step by Step
You can easily write a business plan on your own, but as you have so many other things to consider and focus on, it is better to take help from experts. There are few professional advisors that can help you avoid writer’s block and provide you with elaborate templates in which you can enter the details without any hassle.
Most of the young and aspiring individuals are eager to dive into work but may have dozens of questions and may need tips on writing and where to start. The tips you need to follow to get a business plan approved are
- Critical Thinking and Decision Making
If you are a first-time startup, then having a plan will help you make informed and better decisions without risking any significant financial loss.
- Consider all the Details
Putting together a business plan requires considering all the major and minor details. You have to analyze the operational, financial, and administration aspects.
- Avoiding Common Mistakes
Most startups and small businesses find it hard to survive and sustain a competitive market within a year or two after going operational. Some common challenges are lack of capital, tough competition, lack of advertisements, and not pricing the products or services correctly.
- Ensuring Viability of the Business
Most businesses are products of passion which is a good thing as passion drives a person, but in these uncertain economic times, one has to consider economic side of things as well. Market research is necessary to determine the needs and wants of customers and whether the business will be a success or not.
- Setting down Objectives and Goals
The two fundamental elements of a business plan are ‘Objectives’ and ‘Goals’ that help you stay motivated and track the progress of your business. Sharing a business plan with the management of the company allows you to diversify the types of changes needed to attain long-term success.
- How to Secure Financing
Starting any business requires collecting adequate money to launch and establish a business. To secure a bank loan or pitching the business idea to a venture capitalist requires a well-outlined business plan. You need to forecast expenses carefully, determine expected cash flows and sales, and manage operational costs.
How to Get Funding for a Business Plan
Writing down a business plan and goals may seem easy, but the most crucial aspect of starting a business is considering the finances you require. The first stage is to determine if you will be developing any product or delivering any service to the consumer.
For example, you are an expert in baking and want to start a bakery, which means you will need money to buy or rent a place and source all the materials necessary to make the bakery products. Similarly, if you are a professional hairstylist, you will also need to launch your salon and provide hair cutting and styling services to consumers.
Nearly every new business requires operating capital to get the business off and running. The chance of securing capital and investment is next to none without a proper business plan. Apart from startups, even an established business company may need investment to expand and buy new equipment or property.
In the current times of the Covid-19 pandemic, the market trends are still uncertain, and every investor and financer will want to look at a business plan that can succeed and multiply the gains. Investors make calculated moves and will not risk putting money if they sense that a business idea will not give them the returns as promised.
The type of capital or initial funding you require depends on the type of business you are developing. The amount of money you need will affect how you will structure your business. Every business idea is different, and there is no one financial solution that fits all. Once you figure out the finances you need, the second step is to determine how to get it. The three options you have to get funding for a business plan are
One of the popular trends is getting funding from venture capital investors who provide the needed money and want to share ownership in the company. But venture capital usually emphasizes high-growth companies, takes higher risks for higher returns, and asks for equity rather than debt payment.
To get venture capital investment, you need to
- Search and find an investor
- Discuss your business plan
- Analyze the operations and financial aspects
- Work out the investment terms
One of the most common ways is to ask a bank to provide a loan to start your business. But banks only provide a loan after analyzing the business plan, examining the expense sheet, and viewing the financial projections. You may ask various banks and credit unions for the loan and chose the option that offers the best loan repayment terms.
If you do not want to bound yourself for monthly debt payments and lose control of your business, then the best way is to gather capital on your own. You can put up your savings and ask for family and friends to invest in your business.
With self-funding, there is no burden of coming into debt, but it also a risk if, for instance, you do not get the returns as you expected. It may also be quite risky to invest your savings, and you may also have to repay funds to family and friends.
A business plan is never one that you write and save for years to come. A modern business plan should be dynamic, flexible and allow you to revise and perform required changes according to given time and situation. Once you have set the benchmark, it will be easier for you to analyze the performance of your business company.
Industry experts suggest that businesses have a chance to grow at a much higher pace if they follow the business plan and constantly monitor the progress. Putting forward a well-defined plan may not immediately catapult you to success and fame but will surely lay a strong foundation for your future endeavors.
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