Business plans are important in any company’s development lifecycle. From start-ups to already established firms, the plans provide a blueprint to how specific goals can be achieved. It is easy to pass the document off like any other company strategic plan. However, the document answers very fundamental questions that determine the future of an entity. As such, its quality is of much importance to you as a corporate executive or as a business owner.
So what constitutes a good business plan ? The key to a comprehensive plan lies in its approach to short-term and long-term business goals. The short-term goals refer to those that can be achieved in one year. Long-term goals do address plans whose implementation’s schedule goes beyond one year. Achieving this can present a challenge. That is why the blueprint should further detail appropriate steps to achieving the set goals.
Some businesses have been locked out of meaningful opportunities. Their failure to present a business plan when required plays a role to this predicament. Some key stakeholders in the economy demand for a company plan before they can commit financially. Potential investors and financial institutions top the list of parties interested in the document.
Developing a business plan is not complicated. Of importance will be to answer pertinent questions key to a business overall growth and performance. There are a few tips that will set you on the right path to developing a compelling business document. Let us have a look at three critical ones.
1. Know Your Audience
By knowing your audience, you will be better placed to formulate a plan specific to what they are after. Your business has two options. The first is financial institutions. Their primary objective is to fund your business through a loan as opposed to what investors do. Theirs is more of a strategic partnership. The information both may look out for may vary.
2. Provide Evidence
Any claim made should be backed up by facts. In doing this, you solidify your credibility.
3. Being Conservative In Your Projections
Having conservative figures does not cap your ability to surpass your targets. It makes business sense to have goals that are attainable.
To achieve a quality business plan, you will have to address the following areas that form the right content.
The rule of thumb under an executive summary is its need to be captivating, short and to the matter. Caution is advised when developing this section. It is important to detail issues particular to your company. Due to this, the content in a startup’s executive summary varies with that of an already established entity. However, all summaries discuss one thing, what you are asking for. This section should be tailored to state your intention to the party you address it to.
Before outlining your business under this section, the reader needs to have a picture of the industry your entity operates in. Give a short description of the industry, discussing its present outlook as well as what the future holds for the company. It is also important for the reader to be aware of the market dynamics within the industry. The information should include the entry of new players and the impact their products or services have on your business.
Goods and Services
A key component to be addressed in the plan is what your business offers to the market. Detailing all your products and services is crucial to your reader. This section informs their decision to invest in your firm based on their interest. The information in this part of the plan can dictate the level of funding you receive. How is this achieved? Simply put, investment decisions are made in the backdrop of the products or services you provide. Manufacturing entities, for example, do require a much larger capital infusion compared to a service provider.
Particular customer issues need to be addressed. Think of it as profiling your clientele. Only, in this case, you elaborate what is common to all of them. Such issues include their demographic, their needs, and their numbers.
On this, prudence is required. A careful analysis of the market has to be done. It should incorporate details of your target market. Of importance to the reader is how your business intends to turn their investment into a handsome return. Be sure to articulate your market share and how you plan to capitalize on it.
Under the competitive analysis section, your reader is interested in the competitive environment and how that affects your business operations. To best articulate this, you will have to detail the competitors you face. It is critical to elaborate the strategies your company has in place to counter the competition. That is, the competitive advantage your business has over other industry players. You could also include the business shortfalls your competitors can exploit to their advantage. However, you will need to elaborate strategies you have in place to address this.
Operations and Management Plan
The purpose of this section is to give a glimpse of your company’s management structure. It should be clear what business model is in place. Details of the management team, their tasks, and the departments within the company form part of the highlights a reader is interested in. When it comes to operations, of importance will be the various functions and how they relate to achieving the business’ strategies and overall continuity plan.
The financial plan is more detailed than other sections. It offers a deeper insight into the overall health of your company. For clarity, you could consider breaking it down into the following categories.
1. The Business’ Capital Structure
Of interest to the reader is the capital running the business. What amounts formed the initial capital and what other funding the company has received. The capital structure also details the ownership of the enterprise. Particulars of any preferred stock or ordinary shareholding should feature. An entity’s capital structure paints a clear picture of a company’s overall health.
2. Revenue and Profit Margins
Detail revenue figures, costs and the profit margins your business has received since its inception. Be sure to have the actual data. What these numbers do is indicate the company’s performance.
3. Revenue and Profit Projections
Based on your assessment, it is possible to generate an analysis of your income and profit numbers. A potential investor is looking for the company’s plan for the next one to five years. It is also prudent practice to have other sources of income feature in this section.
Business plans are a marketing documents. The content describes the business achievements made and strategies meant to steer the company to an ultimate success story. It, therefore, follows that you need to take enough time to develop a plan to build a thriving business.