Any business plan reflects the vision of the entrepreneur. Making an effective business plan helps the entrepreneur to think and write profoundly about what needs to be achieved and how it will be done.
A simple and intuitive business plan brings to the table clarity on the path chosen, as well as on approximate timelines for required goals, and on the necessary resources to achieve this.
Why do you need a business plan?
Most often, entrepreneurs hesitate & detest writing business plans! Why?
Several recorded comments on this are:
1. “Why do I need a business plan? It’s all there in my head! “
2. “I have a small startup. Business plans are for big companies.”
3. “Does anyone read a business plan?”
4. “I am very busy doing other work for the company. So, I don’t have time to write one.“
5. “Do all successful entrepreneurs write one? “
But, let me tell you that a business plan is a must for all startups. Statistics from studies indicate that writing a plan significantly increased the chances that you would go into business. One reason for this is that people who write business plans do a lot of researching on markets and preparing projections required for a startup. However, it is a tedious task to do.
Related Article: How to Identify a Good Idea for Your Startup
A well-thought-out and organized plan also help you step back and think objectively about your business venture and assist in your decision-making regularly.
So, for an entrepreneur, a business plan,
• Charters out a clear path to achieve the goals of both the existing and a new business
• Helps to reinforce the strategies to achieve the goals
• States target market for establishing the matrix
• Helps the entrepreneur manage the responsibilities and the critical resources
Let’s look at other groups who may be interested in your business plan:
1. Investors for equity funding
2. Banks for Loans
3. Key employees of the business
4. Potential partners or alliances
Elements of Business Plan
As an entrepreneur, you must understand the various components that go into making an effective business plan.
Let’s look at a few of these elements of the business plan:
● Vision and goal – This is one of the most critical things for a business plan. You must write down the purpose and vision for your startup.
● Company Description – It must be included to give a short description of the industry. When you describe the industry, discuss the present outlook and future possibilities, competitive advantages, and various markets within the industry. Also, if your business is new, give information regarding the origin of the business idea, the date of formation of the company, and its initial supporters. If your startup has been in existence for a while, you should include a brief history and milestones
● Industry Analysis – This part should be added to convince the reader that the product or service will have a substantial market share in a growing industry and can achieve sales in the face of cut-throat competition
● Competitive Analysis – This is an essential element to add to BP. The purpose of including competitive analysis is to determine
• The weaknesses and strengths of the competitors
• Strategies that will empower you with a distinct advantage
• The entry barriers that can be developed to prevent competition from entering your market and
• Any weaknesses that can be fixed within the product development cycle
● Management Team – It is all about the people, who is who and who will do what in your startup. Most investors invest more in the team of your startup than the business model. It is vitally important to demonstrate that the management team has complementary skills/experiences
● Operation Plan – It describes the logistics of your startup such as
• Responsibilities of the management team
• The tasks assigned to each individual
• Capital and expense requirements for the operations of the business
● Marketing Plan – This section describes the actual marketing strategies and execution plan to reach the potential market
● Financial Plan – The financial section is the most looked at the section that contains profit and loss account and projected balance sheets
● Risk and Contingencies – Identify and include the main risk to the business, and describe their potential impact on the financial projections
● Appendices – Documents, such as, advertising materials, market research studies, photos of the locations and planned equipment, etc. that persuades the reader or is a proof of what you are saying must be separated from the business plan and added as appendices
Related Article: Steps To Analyze Your Idea For Startup
Format of Business Plan
Most entrepreneurs make their business plan into a word document or a PowerPoint presentation, and once it becomes very detailed, it becomes complicated for stakeholders to consume. So, it is very important to put down a crisp and simple business plan so that external stakeholders, like prudential employees and investors, can easily follow the business plan.
But how do I exactly make it? is the question that comes to your mind.
Let’s look at the various things that you need to keep in mind while creating a crisp and effective business plan.
1. Language – Keep the language simple; keep it straight forward and also use short sentences
2. Use Table and Charts – Use adequate tables and charts, to break the monotony of plain text
3. Font Size and Spacing – Use of appropriate font size and spacing is must make it more readable
4. Easy Reading – Since you are telling a story, your story has to be clear, intuitive, and convincing. Arrange all the sections in such a way that it gives a clear, compelling, and evocative tale.
A business plan is not only vital for you as an entrepreneur, but it is also critical to convincing external stakeholders like investors of potential recruits.
The plan should be easy to understand for all stakeholders in the organization and should cover all the aspects necessary for understanding the intended journey of the venture.
Moreover, the length of an ideal business plan is anywhere between 15-20 pages, but of course, it depends on the individual business.