How to write a business plan
There is this common saying that goes thus, he who fails to plan, plans to fail, of the greatest stories ever recorded by men in their different ventures and endeavors all came as a result of some intentional planning. No body jumps into an unknown river with two feet all at once, instead of doing this; he uses a foot to test the depth of the water before inserting the other. This is called planning, no sane or rightly minded human embark on a journey without a proper planning.
Planning is very important in any phase of our life. It can be anything from a short trip to a setting up a business. Planning helps you stay prepared to face any untoward situation and let you mitigate losses if any. When you set up a business, it is important to frame an efficient and effective plan.
Planning plays an essential role in our lives. Be it anything, right from getting up in the morning to a trip, we plan. Planning is that one step which does not only indicate the presence of a conclusive act but also helps us to be ahead of certain unwanted situations and mitigate the losses, it is the starting point. When one is up for setting a business empire, it becomes all the more important to have an effective and efficient plan at hand to be implemented when and where required
It does not matter if you are starting a small business venture or a big one, a business plan is a very important tool to help you start and grow your business, it is some sort of road map or guiding template to help streamline your process, define what you really intend doing and how you intend doing it. It provides or gives the much needed clarity from the tiniest of details to the biggest of them all. From marketing and finance to operations and product/service details.
While some owners may be tempted to jump directly into startup mode, writing a business plan is a crucial first step for budding entrepreneurs to check the viability of a business before investing too much time or money. Either you intend starting selling of clothes business, starting a car selling business, dry cleaning services in Nigeria or anywhere in the world, your business needs a business plan. The purpose of a business plan is to help articulate a strategy for starting your business. It also provides insight on steps to be taken, resources required for achieving your business goals and a timeline of anticipated results
There is no doubt that starting and growing a business requires a whole lots of process and resources as well as energy which is why you must have a plan of what to do and how to do it in order to save you from exerting your energy and resources into areas that are not needful or that does not in any way help or facilitate the growth and development of your business. From thinking or brainstorming about the choice of name, to branding, getting funds, business registration, all these can be really demanding. The trick to successfully getting your business off the ground is to meticulously plan and organize your materials, prioritize properly, and stay on top of the status and performance of each and every one of these moving parts.
What is a Business Plan?
A business plan is an important document in starting a business which helps business owners or investors to maps out the details of their respective business. It covers the totality of a business venture when starting it , things what the business will sell, how it will be structured, what the market looks like, how you plan to sell your product or service, what funding that will be needed, what the financial projections are, and which permits, leases, and other documentation will be required.
Why is a business plan necessary?
The importance of a business plan to the success of any business venture either small or big cannot be overlooked . Some of which has been emphasized in some earlier part of this article. Listed below are some of the important features of business plan or better put, why a business plan is important for your business venture.
- The critical perception of a business plan of any company is to show you that your business is worth starting and the idea is worth pursuing. It provides you with the possibilities to get a detailed look at your goals. In case there is something to change and improve, it’s high time to do it before the business plan of your company becomes implemented.
- A business plan is integral in selling your company to potential investors and bankers. But as important, the process of writing involves you and your partners taking a real look at what you want the future of your company to look like and how you’re going to make it happen.
- A business plan is a blueprint detailing how the gears of your business get in mesh to generate profits. A sound business plan contains the information needed for effective operation and management of the company. It explains what is possible for the business, how it will be done and why it will be successful. The business plan will provide a detailed outline of the business which will not only attract capital and help people be on the same page but will also help equalize our emotions and prevent us from making mistakes, which at the initial stages can be very harmful.
- A business plan explains how the business will operate in the marketplace. It describes what is being sold, who the prospective customers are, where they can be found and what is needed to succeed. The business plan guides the entrepreneur through the start-up phase of the business and keeps her focused.
- The business plan functions as a prospectus for potential investors. It anticipates capital requirements and predicts cash flow to reassure lenders or backers. It also helps put together the best team by explaining the business in a presentable format. A good business plan can also play a part in attracting reliable suppliers.
- A business plan helps to identify possible mistake. It not only prevent us from making fatal mistakes, business plans can also locate inherent and unrealized loopholes. Further, through a business plan, one can also receive potential opinions and feedbacks.
- Having a business plan will make it easier to raise funds as it will become very easy to communicate with the investors. It will give a detailed view of the business which will not only be advantageous for the aspirer but also the investors.
- By being able to evaluate factors such as the feasibility and the potential weaknesses, one can avoid the pitfalls thereby making a progressive step towards success. It increases the chances of success considerably.
The six components of a business Plan
Whether you’re building a business plan to raise money and grow your business or just need to figure out if your idea will work, every business plan needs to cover 6 essential topics. Here’s a quick overview of each topic. There are a lot more details and instructions for each step later in this guide.
- Executive summary
The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. Most people write it last, though. Learn more.
The opportunity section answers these questions: What are you actually selling and how are you solving a problem (or “need”) for your market? Who is your target market and competition? Learn more.
In the execution chapter of your business plan, you’ll answer the question: how are you going to take your opportunity and turn it into a business? This section will cover your marketing and sales plan, operations, and your milestones and metrics for success. Learn more.
- Company and management summary
Investors look for great teams in addition to great ideas. Use the company and management chapter to describe your current team and who you need to hire. You will also provide a quick overview of your legal structure, location, and history if you’re already up and running. Learn more.
- Financial plan
Your business plan isn’t complete without a financial forecast. We’ll tell you what to include in your financial plan, but you’ll definitely want to start with a sales forecast, cash flow statement, income statement (also called profit and loss) and your balance sheet. Learn more.
- 6. Appendix
If you need more space for product images or additional information, use the appendix for those details. Learn more.
Business plan tips and resources
Now that you’ve written your business plan, here are some tips to help your hard work stand out:
- Avoid over-optimism: If you’re applying for a business loan at a local bank, the loan officer likely knows your market pretty well. Providing unreasonable sales estimates can hurt your chances of loan approval. “They know what you can expect sales to be for that type of business in that market, “the keyword here is that you should be realistic and very pragmatic. Work with data that are very achievable and do not try to inflate or increase your figures unnecessarily If you walk in with a sales forecast 50% higher than other businesses, they are going to know that you are not being realistic, and that’s going to work against you.”
- Keep it concise: All you need is 15 to 25 pages for a good business plan, as long as the plan is clear, concise and contains all of the relevant information. Focus on the key elements of your business plan and avoid getting too bogged down by the technical aspects of your business or using too much industry jargon. You can always put supporting information or other important details in the appendix.
- Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors, taking their mind off your business and putting it on the mistakes you made. If writing and editing aren’t your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.
Things to note when writing a business plan
- How unique is your Business– How is your business different? How is the market shaping your predictions and presence in it? How do you plan to sustain yourself in the market? What does your competitor have that you don’t? These questions will be running a marathon in your mind, and they should, especially when you’re writing a business plan.
- Think about your Target Audience
Many times they forget the audience/reader of a business plan; this is quite a common mistake. In order to convey the important points in a business plan you need to know what kind of audience/reader is going through your work. Business plans will differ; you won’t share the same one with the investor and team. The investor will be shown target sales number and predictions on growth but the team will focus on technical problems and solutions. It’s best to write a detailed business plan so that alterations are possible later on in accordance with the audience you want to appeal!
- Use Reliable Market Research– it is quite important that when you are doing the market research, do well to use information that are credible. In preparing your business place, you will definitely need information that you will use to put up your plans and how to execute it, so if you must get them which you will definitely need to, ensure that they are facts and very credible. Do not go online and source for information. Be sure you are using organic information, and not just information based on assumption. Go to the field or market yourself, conduct your survey yourself and do not depend on arms chair researching which offers no sure credibility