What is meant by Business Plan?

Are you planning to launch your business soon? Does it overwhelm you to begin planning for all the basic tasks like a marketing plan, production plan, sales forecast, budgeting plan, and an overall business plan? And some external factors like attracting business partners or seeking financial aid make this a compelling proposal. This article can help you steer out of your struggles to write an effective business plan. Read on to learn more about the business plan and its uses.

We need to know a few basics of a business plan before we create one.

What is a business plan?

A business plan is a document that is written or a typed detailed description of the procedures involved in a business to achieve goals. This is an outline of a strategy that covers the financial, marketing, and operational features of a business.

A business plan lays out the company goals and can be very crucial as they have the potential to draw investments. A business plan is equally important for new as well as existing companies to be on track in the future.

What is the importance of a business plan?

There are some benefits of creating a business plan. A few points here can explain:

Business Planning will assist you steer your business as you begin and grow

Consider your business plan as a GPS so that it will enable you to structure, run, and grow your new business. A good business plan simplifies every stage of your business from beginning to managing.

It's easier than you might think

A business plan is ideally a written tool about your business and it projects 3-5 years ahead and maps an outline direction that the business intends to make money and generate revenue. Think of your business plan as an active project instead of as a one-time document. Have short-term and long-term plans like one for sales, marketing, pricing, operations, and so on.

It helps you reach business milestones

A well-researched business plan gives you the liberty to think accurately about the basic elements of your business and thereby assists in your decision-making process as you move forward. You can arrive at a decision, whether a loan is required or not to secure your business. The plan need not be a reference book that has to answer all your queries.

Business planning can help you in securing funds

A well-thought-out business plan can attract funding or business partners. If one is in place, it will give investors confidence when investing in your company and will ensure a return on investments.

There is no one correct method for drafting a business plan

To draft a business plan you do not need to be too overwhelmed about a right or wrong way. Choose a format that works for you and just remember that it should meet your needs. Most business plans usually fall into two categories: traditional or start-up.

For a better understanding before creating a business plan, we need to know the categories.

Traditional Business Plan – These are the most common traditional business plans, as per the Small Business Administration. Traditional business plans are more conventional in their approach and thorough in each segment. These are usually much longer and require more effort.

Start-up Business plan -  Startup business plans follow a standard structure, though they are not as regular as in the business world. These business plans are usually short, ideally one page with little detail. But If a company uses this plan, the startups are expected to give more details when an investor or lender requests it.  Check this guide to building an effective gym business plan for your fitness venture.

Keeping in mind the above-discussed points, here is a step-by-step process to write an effective business plan:

Step 1: Executive summary

This section announces your plan and must instantly capture the readers' attention. To convince them to trust in your business, you should present and explain your ideas. You must provide a detailed summary of your plan and the operating model for your business. Assign about 1-2 pages for this part.

The main elements of the Executive summary usually include:

- Business name

- Essential employees

- Address

- Background

- Goods and services offered

Step 2: Company Overview

You can use this section to thoroughly detail your business. Readers can be informed about the scope your business aims to capitalize on, the target market, what makes your business different from competitors, and more.

Step 3: Market and competitive analysis

Market analyses of your business successes periodically will be an instant hit with your readers.

In this section describe the market and industry in which your business operates, and the opportunities you shall influence. Share your market research and in case of any unique trends, showcase those findings here.

This section can also be a space to present the competitive scenario accentuating the competition’s strengths and weaknesses. The neglected areas of the industry that your company will address can be factored in. Your modus operandi for growing a customer base can be presented in this section.

Step 4: Operational Framework

You get into the tangible details of your enterprise in this section. Detail out the business operations through a plan. It is required to mention the company’s legal structure, whether it is a sole proprietorship. An organizational chart can highlight the stakeholder's contribution to the company.

Step 5: Unveiling products

All your products and services or offerings can be kept in this section. Use this for product description and highlight the differentiating factor. Discuss the price points and their dynamism as against competitors. You can even put your marketing and promotion ideas and the target market coupled with awareness-linked concepts.

Step 6: Capital raising

You can add a special section if you aim to attract an investor or lender in connection with your funding request. Communicate the amount of capital you are aiming to raise and why giving special emphasis on whether you are looking at Working Capital or Business Loan.
Therefore a plan is essential to ask for funds and it is also expected to mention the projected Return on Investment (ROI)

Step 7: Financial analysis and future projections

In this section, you could showcase your business performance in the past and its impending growth in the future. Use charts and graphs for easier explanation. For operational businesses, it will be a good idea to highlight the financial stability, and if your business is rather new and yet to be profitable, present realistic projections.

You can also research industry standards and analyse the performance of comparable businesses. To support your statements, include several years of income statements, balance sheets, and cash flow statements. Moreover, provide a five-year financial projection with a well-defined rationale.

Step 8: Appendix

You can add licenses, patents, charts, etc., along with the business plan as an appendix so that it does not clutter the plan. Ensure that the information placed here is related to your business.

Now that you comprehend how to create a business model, take the first step, and turn your entrepreneurial dreams into reality.

FAQs

Q1. Before making a business plan, what are some of the basic questions one thinks about?

Ans. You may have the following questions:

• What is the objective of my business?
• Do I have the right people in my team?
• How much capital do I need to get started?
• What are the potential benefits and drawbacks?

Q2. How long does it take to write a business plan?

Ans. The time would depend on the urgency of your plan. If you are writing daily or you are working with your team, the time may be shorter. For complex business ideas, it may take longer.

Q3. What skills do I need to write a single-page business plan?

Ans. You need good communication skills, strategic thinking acumen, attention to detail, and teamwork skills to write a single–page business plan.

Q4. Does revisiting a business plan help companies adapt to changing goals and directions over time?

Ans. Typically, looking back into the plan regularly to see if goals are met or if they have changed and evolved helps companies develop further in moving in the desired direction.