Writing a Business Plan
A business plan (BP) is a document that indicates the feasibility of a business and the strategies to be followed in order to succeed, from all points of view. A thorough business description, details of the financial planning, operational management, marketing strategy, business model, process management, people management, tax planning, customer relations, internal and external communication, market analysis, and employee relations are some of the many components that arranged in an organized manner, are the backbone of a BP. Typically, a BP is prepared before the business is launched or when a new management comes in place. Still, it is worthwhile to mention that we have seen a number of experts or consultants suggesting the use of this important management tool do reinvent companies that are already operating, in a way to revamp them.
With this in mind, let’s talk a bit about a BP and on how to write it. The goal is to have a clear, objective proposal that you can follow step-by-step while developing your business. The plan should serve to guide you throughout the startup (or revamp) process, like a road map for a new adventure. Research is one of the biggest value-adds of writing a BP. It forces companies to learn what they can expect to make and what the industry trends are. If the research indicates that your idea is viable, then you can proceed by writing down the goods or services you will offer, your marketing plan, how much funding you need, your goals, etc.
A business plan generally has two main parts: a description of the entire project and the financial data.
Here are some of the main components of the project section:
- A business description: type, status, business purpose and objective, and unique aspects. It usually begins with a short description of the industry. When describing the industry, it is important to discuss the present outlook as well as future possibilities. You should also provide information on all the various markets within the industry, including any new products or developments that will benefit or adversely affect your business;
- The marketing strategy: your target customers or clients, why they will want the product or service you will offer and how you will reach them. This topic should include a market analysis, which will force you to become familiar with all aspects of the market so that the target market can be defined, and the company can be positioned in order to garner its share of sales. As part of your marketing plan, you may rely on working closely with another company in a form of partnership;
- A competition analysis: list of whom your competitors are, their strengths and weaknesses, and how you will differ and will be able to beat them. This point will provide you with a distinct advantage, the barriers that can be developed in order to prevent competition from entering your market, and any weaknesses that can be exploited within the product development cycle.
- A location analysis: your proposed location, the reasons for your site selection and the type of facility you plan to use;
- A production analysis: depending on the products or services you will provide, a list of what and how you will produce, and the equipment needed. Lay out a plan for the day-to-day operations of your business;
- The management and personnel requirements: staff qualifications, specific duties, wages and other particularities. Use this chapter to describe your current team (if you have one) and whom you will need to hire. You will also provide a quick overview of your legal structure, and history if you’re already up and running.
In most cases, the financial section includes the following information:
- All funding sources and applications: where you will get the money to start or revamp your business, how you will do it and for what you will use it. Remember: investors don’t invest in ideas they invest in people. Some investors even go as far as to say that they would rather invest in a mediocre idea with a great team behind it than a fantastic idea with a mediocre team;
- When applicable, a capital equipment list: the equipment that you will need and what it will cost. It would be helpful to check the availability of line of credits and government grants or subsidies as these funds can lighten the economic burden of your venture;
- Financial statements: balance sheet, projected income statement and projected cash flow analysis;
- Historical business records (if you are revamping an existing business).
The financial information of your business plan is critical to accurately evaluate the feasibility of your project and to plan the investment required to bring your new or existing business to a stable level of operation. Be realistic about your projections. Over-optimism can result in business failure; over-pessimism can hamper your decision-making and jeopardize your chances of success. A professional consultant should review your business plan to ensure it includes all necessary information.
The structure of a BP is not rigid, and you can include everything you feel is necessary, but it needs to be constantly updated as the company develops along the way of achieving the business objective. Your business plan should be a tool you use to run and grow your business, something you continue to use and refine over time. An open-minded leadership is critical to weathering rough patches. And business plans and business models without the capacity to change remain at big risk.
Writing a BP may seem like a difficult hurdle, but it doesn’t have to be. If you know your business and are passionate about it, writing a business plan and then leveraging your plan for growth will be not nearly as challenging as you think.
This article is for general, indicative purpose only and should not be considered investment advice. Florida Connexion is not liable for any financial loss, damage, expense or costs arising from your investment decisions based on this article.
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