Every business has plans, regardless of whether they’re drawn out in your mind or jotted down on a napkin or formally incorporated into an official business plan. A business plan is essentially a description of your business and what you intend to accomplish, and the way you intend to accomplish it. It outlines your company’s goals as well as strategies, potential issues, and ways to solve those issues, and the steps you need to take for financial management to run your business (think of an SWOT analysis with a twist).
Based on data collected from the panel study of entrepreneurial dynamics and studied by Clemson University’s professor of entrepreneurship, William B. Gartner, you’re nearly two times more likely to launch a business by simply drafting the business plan.
What is the reason you require the business plan?
Business plans are used for a variety of reasons, and they will greatly affect how strong your plan is and the information it comprises. Business plans are typically utilized to:
Share your vision with potential investors to raise funds.
* Potential for the development of a new business.
• Learn to run your company more effectively by ensuring that everyone is on the same level (i.e., everyone knows the intended audience and the marketing/sales process).
• Consider the possibility of running a business. A lot of entrepreneurs will put their ideas down on paper, then run them through a mentor to determine whether they can be sustained, and then tweak and improve them from there.
What kinds of business plans do you have?
There are two main kinds of business plans, and while both have technical names, a simple approach to consider both is the conventional business plan and the one-page business plan. Both have merits; however, if you’re looking to attract investors, choose the traditional business plan. They typically run around 10 pages on average and provide more information about your business.
If you simply wish to bring everyone on the same page, or have a central place where your thoughts are together and you have an easy-to-update document when your business’s needs and your learnings evolve in the future, a one-page summary might be the best solution.
What should a business include?
No matter what style you pick, whatever format you decide to use, your business plan should include the following elements:
Executive summary: Consider it as a more comprehensive elevator pitch. Present a summary of your business as well as your future vision. This should be a summary of the key elements of your plan in its entirety. It is the reason it is usually written at the end.
Opportunity:
What is the problem you are working on? Why should people be concerned? Who is likely to purchase your product or download your software? Who is your intended audience? Who are your competitors, and what is different about your product than the competition? How big is the size of the addressable market? What percentage do you have of the overall market?
Strategies for marketing. How do you plan to earn a profit? What are your sales and marketing strategies? What are the ways you plan to determine your success? What processes do you have to implement to ensure success? If you are required to develop your product from scratch, what’s the best timeframe to bring your dream to fruition? What steps will you have to take to get it done?
Your team and milestones for the company. What are the people you have in place now to ensure your business’s success? Who do you have to recruit? What has your experience been?
Financial Plan:
In essence, it is the financial forecast of your company. How much will your business expenses cost? How much will it cost to pay your employees? What is the cost to you to develop your product? Consider all of the business expenses and ways your business makes enough money to produce a complete break-even analysis, balance sheets, cash flow statements, income analysis, and additional financial metrics.
If you’re planning to ask for money, this section will aid you in determining how much investment you’ll need in the next three to five years. If the primary reason you wrote an official business plan is to secure funding, it is possible to separate it into separate sections and provide a more in-depth analysis of your figures and objectives.
Common Mistakes To Avoid
At the beginning of a new venture, estimating the potential revenue as well as your product’s cost, or even knowing the risks and opportunities your business will encounter, can be a major problem, especially in the case of not having customers yet. It’s also challenging to figure out how much capital you’ll actually require. Do not be afraid to seek advice from those with experience, or who have experienced the same. Engage your mentors or prospective investors. They often know what is required to succeed and can give a more precise idea of what your goals should be when you first begin.
