Do you have to spend some time creating a business plan, or just jump in and start, finding things out as you go? There’s been plenty of discussion about this subject, but no one has pulled the scientific evidence together to decide whether the preparation is worth it — even now.
Maybe you don’t think you need a step-by-step guide to write a great business plan. Some entrepreneurs succeed without a business plan, after all. Some entrepreneurs create prosperous companies without even having an informal business plan with perfect planning, strong management skills, entrepreneurial drive, and a bit of luck. But the chances that such entrepreneurs will fail are greater.
Is a business strategy the sole determining factor for the success of startups? Definitely not. However, excellent preparation also signifies the difference between success and failure. When it comes to your entrepreneurial aspirations, you should do everything you can to set the stage for success. And that is why a great business strategy prepares you to succeed.
A detailed guide to designing a successful business plan is given below.
There are several business plans which are illusions. That’s because many ambitious entrepreneurs see a business plan as simply a tool — filled with plans and forecasts and hyperbole — that will make the company valuable to lenders or investors.
That is a big error.
Your business plan should first and foremost persuade you that your idea makes sense — because of your time, your resources, and your effort are on the line.
So for a good company, a strong business plan should be a blueprint. It should draw out strategic strategies, develop marketing and sales strategies, lay the groundwork for smooth operations, and perhaps persuade a lender or investor to get on board.
For several entrepreneurs, the first step in the process of determining whether to actually start a company is the creation of a business plan. Determining if an idea fails on paper will help a prospective entrepreneur avoid spending time and money on a venture with little reasonable hope of success.
So your strategy should at least be:
- Be as objective as possible, and as rational. After some consideration and study, what may have seemed like a good idea for a company might prove unsustainable due to strong competition, inadequate financing or a non-existent market. (Even the best ideas are sometimes just ahead of their time)
- For the first months and at times years, act as a roadmap to the business activities, providing a blueprint for company leaders to follow.
- Communicating the mission and vision of the company, defining management roles, identifying staffing requirements, providing an overview of marketing strategies and evaluating current and potential marketplace competition.
- Establish the foundation for investors and lenders to use in evaluating the organisation for a funding request.
A successful business strategy is largely compelling. It is an argument to prove. It offers clear, reliable evidence that shows that your business idea is actually sound and rational, and has every chance of success.
An 8 Point Blueprint To The Ideal Business Plan
Generally, a successful business strategy follows a certain flow and has to include a few elements that must be present. Here we have provided a blueprint for developing an effective business plan.
1) Executive Summary
The Executive Summary is a concise description of the mission and objectives of the organization. Whilst fitting on one or two pages can be difficult, a good overview includes:
- A concise overview of the goods and services
- A list of Goals
- A good Business Overview
- A high-level feasibility argument (including a brief look at your competition and your strategic advantage)
- A snapshot of future development
- A review of the financing conditions
A successful business solves issues with the clients. If your Outline can not clearly explain how your company can solve a specific problem and make a profit in one or two pages, then it is very likely that there is no opportunity-or for your strategy to take advantage of a real opportunity is not well established.
2) Overview and Objectives
It can be difficult to offer an overview of your company, especially when you are still in the planning stages. If you already own an established company, it should be reasonably straightforward to outline your current operation; however, it can be much more difficult to describe what you plan to become.
So, you need to start by taking a step back.
Think about what goods and services you are supplying, how you are supplying those things, what you need to do to supply those things, exactly who is supplying those items, and most importantly, who is supplying those items to.
Sounds a lot? It basically narrows to:
- What are you providing?
- What do you need to do to run the company?
- Who represents the clients?
- Who are your customers?
If you’re going through this list you’re likely to end up with a lot more information than your business plan needs to. That’s not an issue: start summing up the key points. Your Business Overview and Objectives section could start something like this, for example:
- Your History
- Mission & Vision
- Targets & Goals
- Keys to Success
Certainly, you may provide more information in each section; this is simply a fast guide. And if you’re planning to produce a product or service, the development process and the end result should be explained in detail.
The trick is to explain what you’re going to do with your customers — if you can’t, you’re going to have no clients.
3) Products and Services
You will clearly need to define in the Products & Services section of your business plan, which basically means the products and services that your company will provide.
Note that extremely detailed or technical explanations are not needed and are certainly not recommended. Using straightforward language, and skip the buzzwords of business.
In comparison, it is important to explain how the goods and services of the business can vary from the competition. So you need to explain why you need your products and services if there is no market at the moment.
For example, overnight delivery was a niche business served by small businesses before there was Federal Express. FedEx had to describe the demand for a modern, large-scale service and explain why consumers wanted this service-and would actually use it.
This section may also list patents, copyrights and trademarks you possess or have applied for.
Depending on the nature of your company your segment of Goods and Services can be very long or relatively short. If your company is based on goods, you’re going to want to spend more time explaining those items.
If you’re planning to sell a commodity item and the secret to your success lies in, say, competitive pricing, you probably don’t have to provide substantial product information. Or if you’re trying to sell a product that’s readily available in a number of outlets, the secret to your success might not be the product itself but the ability to compete more cost-effectively than the competition.
But if you’re designing a new product ( or service), make sure that you’re thoroughly describing the product’s purpose, uses, and value, etc.— otherwise your readers won’t have enough information to assess your company.
Key questions to answer:
- Are goods or services in production or already in existence (and on the market)?
- What is the timetable for commercializing new goods and services?
- What differentiates your goods or services? Is there any strategic benefit relative to other manufacturers’ offerings? Are there any business limitations you need to overcome? (And if so, then how?)
- Is the price a problem? Will your operating costs be sufficiently low to offer a fair profit margin?
- How do you buy your products? Are you a fabricator? Is it using components given by others to assemble products? Do you buy goods from manufacturers or wholesalers? If your company is taking off, is there a steady supply of products?
4) Market Opportunities
Market research is crucial to entrepreneurial success. A good business strategy analyzes and measures the trends of consumers, purchasing behaviors, purchase cycles and being able to introduce new products and services.
The process begins with knowing the competition and the inherent opportunities in that business. And that means you are going to have to do some research. Before you start a company you need to be sure that what you want to sell is a viable market.
The process involves a number of questions to be asked, and most importantly, answered. The more deeply you answer the following questions, the more your client understands you.
Start by evaluating the market at a relatively high level, answering some high-level questions about your market and your industry:
- What is Market Size? Is it rising, increasing, or declining?
- Is the industry at large rising, stable, or declining?
- What market segment do I intend on targeting? Which demographics and activities make up my target market?
- Is the demand for my particular products and services going up or down?
- Can I separate myself from the competition in such a way that customers will find meaningful? If so, can I make a cost-effective difference to myself?
- What do the customers expect my products and services to pay for? Are they considered a commodity, or are they customary and individual?
Luckily you’ve done some of the legwork already. You already have your goods and services identified and laid out. The Market Opportunities section offers a sense-check of the research, which is especially important because the selection of the right goods and services is such a crucial factor in business performance.
But your research should go further: Fantastic products are great, but for those products there always needs to be a demand.
5) Sales and Marketing
It’s fantastic to have excellent products and services, but consumers need to know that such products and services actually exist. That is why marketing campaigns and tactics are crucial to the success of businesses.
But bear in mind that marketing isn’t just an advertisement. Marketing — whether it’s an advertisement, public relations, promotional literature, etc.—is an investment in your company increasing.
As any other investment you’d make, money spent on ads needs to produce a return. Although the return may simply be higher cash flow, successful marketing strategies contribute to higher revenue and profits.
So don’t just waste money on a number of marketing campaigns. Build a smart marketing strategy and do your homework.
Here are a few of the crucial steps involved in designing the marketing plan:
- Focus on the target market. Who are your clients? How are they going to threaten you? Who makes the judgments? Determine how to better attract prospective customers.
- Study your competition. Your marketing strategy must set you apart from your competition, and unless you know your competition, you can not stand out. (It’s hard to stand out from a crowd if you don’t know where the crowd stands.) Know your rivals by collecting information about their goods, operation, efficiency, pricing and advertisement campaigns. In marketing terms, what does that fit well for your competition? What its limitations are? How do you build a marketing strategy that illustrates the benefits that you give clients?
- Determine your brand. The way consumers view the company impacts revenue dramatically. Your marketing campaign should strengthen and expand your mark regularly. Think about how you want your marketing to focus on your company and its goods and services before you start marketing your company. Marketing is your future customer’s face — make sure you put your best face in front.
The next step in developing a business strategy is to create an Operations Plan that will satisfy clients, keep their running costs in line and ensure profitability. Your operations plan should outline plans for the management, hiring, production, delivery, inventory — all the items involved in the day-to-day activity of your company.
Luckily, most entrepreneurs have better handling of their plan of operations than any other part of their business. While evaluating your market or your competition might not seem normal, after all, most aspiring entrepreneurs seem to spend a lot of time thinking about how they will run their business.
You need to answer these following key questions:
- What facilities, tools, and supplies do you need?
- What’s the framework for the organization? Who is responsible for certain aspects of the company?
- Is R&D needed, either during start-up or as a continuous operation? If so, how can you get this job done?
- What are the basic personnel requirements? Where and how are you going to introduce the workforce?
- How can you build business relationships with suppliers and vendors? How are those relationships going to affect your daily operations?
- How will it affect the activities as the business grows? What steps would you take to cut costs if the business fails to reach goals initially?
Operational plans should be extremely applicable to your industry, business sector and clients.
7) Management Team
Many investors and lenders believe the management team’s reputation and expertise is one of the most significant criteria used to determine a new business’ potential.
But bringing work into the section of the Management Team would not only help people who may read the proposal. It will also help you identify the abilities, experiences and resources the team will require. Addressing the needs of your organization during implementation would have a huge effect on the chances of success.
Key questions to answer:
- Who are the primary leaders? (If actual people were not identified, define the sort of people needed.) What are their experiences, backgrounds and abilities?
- Do your key leaders have experience in the industry? If not, what kind of experience do they bring to the relevant business?
- What duties will be performed in each position? (It may be helpful to build an organizational chart.) To which authority is delegated and what duties are required in each position?
- What level of salary is needed to attract eligible candidates for each position? What is the compensation structure, by role, for the company?
8) Financial Analysis
Your numbers tell the story of your business. The bottom line results demonstrate some market success or loss.
Financial forecasts and predictions allow entrepreneurs, shareholders and investors or shareholders to accurately determine the potential for success of a company. The availability of detailed financial reports and documentation is important when a company requires outside financing.
But most importantly, financial forecasts tell you if your company has a chance to be viable — and if you don’t let you know you have to do more work.
Most business plans contain five or more key reports or projections:
- Balance Sheet: Defines the cash position of the company including assets, liabilities, shareholders and retained earnings to fund future operations or to act as financing for growth and expansion. It demonstrates the financial stability of an organization.
- Income Statement: This report also called a profit and loss statement and details estimated revenue and expenditures. It indicates how profitable business would be over a given period of time.
- Cash Balance Statement: A revenue receipt estimate and cost payments. It shows how and when cash moves through the enterprise; payments (including salaries) can not be made without cash.
- Operating Budget: A detailed breakdown of revenue and expenditure; provides a guide on how the business will function from a “dollar” perspective.
- Break-Even Analysis: A revenue forecast needed to cover both fixed and variable expenditures. Shows when a company can expect to become profitable under particular conditions.
Examples of any of the above are simple to find. Also, the most basic packages of accounting software contain models and samples. Templates can be found in Excel and Google Docs too. (A fast search such as “google docs profit and loss statement” provides various examples.
Bring It All Together
Although you will use your business plan to attract investors, partners, suppliers, etc., never forget that the purpose of your business plan is to persuade you that your idea makes sense and can actually turn into a successful business.
Note – Always remember do not make a business plan lengthy.
Because in the end, it’s your time, your money, and your effort that is at stake.For more tips and tricks on how to successfully launch a business, keep reading The Money Gig.0