Everything You Need to Know About Writing a Perfect Business Plan
Majority of new businesses fail in the first year itself. This is where a business plan comes in. It needs to explain and show the future of the business as clearly as possible. To be effective, the business plan doesn’t have to be complicated. It can be simple, concise, and to the point. A well written business plan would reveal gaps and gaffes before the business is launched. When someone reads the plan, they will get a clear picture about the business. Most importantly, though, the business plan explains exactly why the business would be successful in the future.
Here are some essential things to know about the perfect business plan.
Different Types of Business Plans
Working Plan –
This is the plan that explains how the business will run and operate. It is all about details and explanations instead of presentation. Because it is internal, it need not include obvious details that the team is aware of.
Mini Plan –
A mini plan should never be more than 10 pages and condenses all the elements of a plan into succinct and clear bites. It is not a substitute for the detailed plan but acts as a summary instead.
Presentation Plan –
This is the plan that would be used to pitch the business to investors and outside parties. As such, it needs to be high on looks and less on jargon. It is a presentable version of the working plan.
Contingency Plan –
This plan answers the “what if” question and is essential for those seeking outside financing. Creating this plan shows that the brains behind the business are thorough, planned, and realistic in their expectations. It enhances credibility of the business.
Sections of A Traditional Business Plan
Executive Summary –
This part explains the basics of the business. It includes the concept, cash flow and similar financial requirements/features, current position of the business, relevant achievements of the company such as patents, et al. It should be short but clear in summarizing vital information.
Business Description –
The business description should start with an outlook of the industry and its important markets, with footnotes and sources. It should mention any new products that could influence the business. It must also include the operation structure of the business.
Market Strategy –
What is the target market and how would it be reached? Answering this question is the purpose of this section. The market needs to be analyzed in terms of structure, size, promotion strategy, distribution plans, and growth potential.
Competitive Analysis –
Basically, this section shows why the business would do better than competitors. It analyzes the competition and discusses their strengths/weaknesses. It also examines strategies to exploit weaknesses and overcome strengths of the competition in the market
Design & Development –
Business plans created for in-development products need to add this particular section. The design & development sections allow investors to understand the basics of designing of the product, its production/marketing development, and a developmental budget to finish it successfully.
Management & Operations –
This section deals with the day to day working of the business. It talks about people, inventory, suppliers, legal environment, personnel, work facility, manufacturing equipment, location, processes, and logistics of every division of the business.
Financial Data –
This section might not be at the front but it is the crux of the plan. It can include projected CFS, 12 month P&L, capital, startup costs, personal financial statement, and a break even analysis for prospective investors.
Different Versions for Different People –
Business owners need to know who the plan is meant for. As such, if there are different parties, it should be tailored accordingly. Keep What Works, Leave What Doesn’t – In the real world, the business plan might have to be tweaked to include things that work and exclude projections that didn’t. Thus, regular reviews are important.
Financial Projections Should Be Realistic –
The sales forecasts and other financial information should always have a basis in reality, especially for investors and banks. This is because it holds a lot more weight than unrealistic predictions.
Blueprint and Processes Drives Growth –
The plan should be taken as a benchmark and should only be changed when needed. Otherwise, it wouldn’t inform how far the business has come since the last year.
Statistics Are Important –
If any claims are made in the plan, they should be backed up by credible sources and statistics. This especially includes projections, market conditions, competitive analysis, and industry information.
Formatting and Presentation Can Change the Game –
A document that is heavy in text can fall flat on its face when it is not backed up by good presentation skills. The font should be industry standard – Arial, Times New Roman, or Verdana. Graphs and charts should be used to break paragraphs. Two column views are better than single columns. Writing a business plan can take long and it is not a job that should be rushed.
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