Running a business is not a hobby or part time work. Whether you’ve just started out or been running your company for years, planning is a key to success and it should never be overlooked. For a business to be successful and profitable, the owners and the managing directors must have a clear understanding of the firm’s customers, strengths and competition. They must also have the foresight to plan for future expansion. Writing a business plan help you with the exactly same thing.
Writing an extensive business plan can be overwhelming and time-consuming, but many successful businesses look at it as an opportunity and brainstorm hard to write and effective business plan.
However, a business plan is very specific to each particular business but the basic elements are the same in all business plans.
Ultimate Guide to Writing a Business Plan [Step by Step]
What is a business plan?
A business plan or B-plan is the formal written expression of the entrepreneurial vision, describing the strategy and operations of the proposed venture. The business plan also goes by other names, depending on its intended audience. Presented to a banker, it may be called a “loan proposal.” A venture capital group might call it the “venture plan” or “investment prospectus". It’s a tool for understanding how your business is put together. You can use it to monitor progress, hold yourself accountable and control the business’s fate. And of course, it’s a sales and recruiting tool for courting key employees or future investors.
How Business plan is different from Pitch deck?
Pitch is when you explain what your product/service is and Business plan is how you plan to growth your business.
A pitch typically is a 11 to 20 slide presentation with less text and more info graphic type visuals. It is more about selling the vision of your company to the investor in a face to face meeting, broadly explaining how you are going to make it.
The business plan is an extensive document typically (25-40 pages) where you have together market research strategy and tactics, lists of assumptions, milestones, metrics, tasks; and projected sales, spending, cash flow, financial forecast, logistics etc.
Business Plan is typically required (if at all) at later stage of funding process but it is good to have it early on. If you have a business plan, preparing pitch deck is relatively easy because it is essentially a summary of the business plan, although structured in a more persuasive manner. A simple way to understand is that you can use a business plan to support your pitch, but it´s not strictly necessary.
What does a B-plan do?
A clear and compelling business plan provides you the roadmap to achieve your entrepreneurial goals on time and tells what you need to accomplish to make your startup a success. It also provides direction, keeps you on track and is usually a requirement when you seek finance. A Bplan basically answers all the comprehensive list of questions that may arise while you are executing your business strategies. One of the most important question is where do want to see your startup in 3 months to up to 5 years down the line. What level of revenues and profits do you have at that time? How many employees? How many locations? And so on.
A business plan also helps
- To learn about your industry, market and competitors
- Write down exactly where you are in the market and where you’re headed.
- Identify challenges you may come across and work out strategies to avoid or overcome them
- Understand your business finances, including managing cash-flow and determining your break-even point
- Set specific goals, timeframes for achieving them and how you’ll measure performance
- Improve your chance of securing financing and investment
- Make sound business decisions that focus your activities, maximise your resources and give you a competitive edge
- Learn about the different forces and factors that may affect your success
- Top executives of the firm to think about their business in a comprehensive way to communicate their objectives to individuals who may have a stake in the firm’s future,
- To have a basis for making decisions and to facilitate the planning process
Why do you need a business plan?
Established businesses should review their business plan and update it regularly in order to provide direction for growth. It also enable . You will always afford a smile with effective business as long as you understand the need of a business plan as outlined below:
A business plan is vital to obtain financing. If you’re looking for funding for your startup, you’ll need to show banks and investors why they should invest in your startup. They will only risk their time and money if they’re sure that your business will be successful and profitable.
A thorough and well-researched business plan:
- Shows that you’re serious about your business
- Helps lenders and investors to understand your business idea
- Shows your predicted profits and income streams.
An October 2007 study by Babson College found that start-ups with a business plan raised twice as much capital as those without a business plan within the first 12 months. Along with the B-Plan your marketing plan and financial projections are also important to get you funds.
To clarify your business operation and focus on core business objective goal
At a start-up, execution is everything. That means you have to set priorities, establish goals, and measure performance. It gives your business direction, defines your objectives, maps out strategies to achieve your goals and helps you to manage possible bumps in the road. This means you can focus your resources and energy on what you need to do, rather than spreading yourself too thin.
To create a guide for managing your business, Developing your business plan helps you to step back and look at what’s working in your business and what you can improve on. If you have employees, the planning process can be a good opportunity to seek their feedback on possible ideas and improvements. Taking the time out of your business to plan will give you a sense of control about the future of your business and pay off in the long run! If you’re already in business, it helps you to step back and look at what’s working and what you can improve on. Instead of worrying about the future, a business plan helps to give you a sense of control over your business and your livelihood.
Communicating vision with your team
The last thing you want to do is work on your start-up for a year, and shut down at a later stage. Many founders learn the hard way that they kept much capital to reach their goals, took on partners with the wrong skills and resources, or don’t have a viable way to make money. The perfect business plan for a startup is the one that will assist you in successfully communicating with financiers and other people involved in your startup. A business plan helps get everyone involved in your start-up heading in the sprinting down the right ad same path.
To counterbalance your emotions
At times during your start-up experience, you’ll be manic—so passionate about your ideas you lose sight of reality. At other times, you’ll be overwhelmed by doubt, fear, or exhaustion. When your emotions get the best of you, having a business plan lets you step back, and take an objective look at what you are doing and why, what you know for a fact and what you are trying to figure out.
To get new customers
BPlan can also help you to generate more leads. The key is to take a step back from your daily routine and re consider your strategy. Because while you were building your business, you found that the market has changed. So the next thing you do is to configure Your B plan as per the new projections.
Basically, everything that we want to do must have a direction and objective. It is not always ideal to work blindly. When starting a business you need to have an idea who will be your customers and the services you want to offer to them. Clearly defined objectives should act as a base to help you achieve your goals. A Business plan gives a direction on where we want to move to before and after taking off.
Growth is something that people would dream of, as everyone has a goal to achieve within a specified period of time. A Business plan will always be there to help you predetermine the future market trend in terms of taste and preference for the target audience. It helps in assessing the risks involved in a business and look for ways of managing the risks so that a business does not operate at a loss. Resource planning is also made very easy. You are able to tell what is needed where and costs involved.
Attract Funding and partners
Most of the people have great and brilliant ideas about venturing into new businesses but the biggest challenge is the capital. Donors nowadays are easier to get then before but you need to present a solid business plan to them. Therefore, we need to be strategic enough and unique while selling ideas to them. The way you design your business plan determines the potentiality of the business in terms who would want to link up with you. Well planned business attracts investors to get you started and even invest more and more. Once you attract more partners, network is assured hence boosting resource mobilization strategies. You can never get dry with ideas on how to run the business.
Different departments in a business have different roles to play. A well-planned business plan designs well who should do what and who should report to whom. Allocation of tasks becomes easy and work is done on time. This avoids so many confusion that may arise creating unnecessary delays in work delivery. Communication a channel becomes well stipulated hence smooth flow of information from one department to the other. Management of staff becomes very simple and resources are also well managed.
Basically, for any business plan to be beneficial, it is important that we consider doing a SWOT analysis (strength, weaknesses, opportunities, and threats). This gives an idea of what we expect and helps us plan and manage our businesses.