Thinking of building a business or to expand the one you’re already running and needs to write a business plan? …
Read on while I take you through a step by step process of what you need to know and do.
It is pertinent to note that the success of any profitable business venture starts with having a business plan.
So, whether you are starting a business venture or expanding your existing business, you should consider having a business plan.
Your Business plan is your compass that will help you map out a new course, navigate through uncharted territory, thereby providing the road-map to achieving your needed success. Writing a Business Plan doesn’t have to be tedious or hard. hence, this guide is put together to explain in simple terms the business plan concept and to show you step by step guidelines to put your own plan together.
It is usually observed that despite having a great Business start-up idea, most businesses are not always successful. According to statistics, within the first five years of operation, 90% of businesses failed and of the remaining 10%, only 1 out of 10 businesses survive the first five years.
So, the question then is… what makes some businesses fail while others prosper? There may be several reasons including but not limited to the following: poor business strategy, poor customer services, poor logistics and cost management, and inadequate products but the major reason is lack of a concrete business plan.
A Business plan document is the most important piece of document you need in your quest for starting a new business because it helps define goals and how they will be achieved. If you take your time and set a concrete goal and achievable plan it will make your journey to a successful business venture worthwhile.
Sequel to the above-mentioned lapses, I have compiled an all-inclusive list of areas to consider while writing your plan, these will help define your goals and the necessary steps to achieving them.
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Areas to Consider When Writing a Business Plan
Step 1: Define Your Vision
Having a clear vision will give your business a clear focus, and can stop you from heading in the wrong direction. Note your vision is a vivid mental picture of what you want your business to be at some point in the future, based on your goals and aspirations.
So making it clear and concise will save you seasons of regret. Hence, writing down your vision for the company will help you define it and moreover, it will help your staff identify with the mission. Then, daily activities of the business will be aligned with your vision for the business. this connotes the first step of writing a business plan.
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Step 2: Set Goals and Objective for your Business
Never assume that your goals need to be small to accommodate your limitation, think big. Clearly define your short-term and long-term goals. Consider all aspect ranging from the revenue you want to generate, number of outlets you want, number of customers you need in your database, the target population (age group, gender, Etc.) as well as the amount of passive income to be generated in future.
Step 3: Define your Unique Proposition (USP)
Here, you are required to define what will stand you out in the crowd. So, first of all, you need to answer this question, what will differentiate me from the crowd. Remember your unique selling point is what will attract to you more potential customers, also how is your product or services different from others in the market.
While writing your business plan, you have to write the extras that your customers will get that will make them to always look out for your business.
Step 4: Know your Market
It often happens that you have an awesome idea but someone else will start the business with exactly the same business plan.
Several businesses can provide the same services and still survive the huge market. You should know your market like the back of your palm, you research your market to know your competitors, their products, and services.
what are the current and future of the company? Know the larger picture, know the benchmark that can be used to gauge your business performance such as gross turnover, profit margin, etc. once you know your market indices, you can manipulate it to your favor.
Step 5: Know your Consumers
This goes with the popular saying, Customers are the most important part of any business and you should know that customer is key. If you want them to buy your products you should know what your ideal customers want.
Today customers are spoiled with choice and they are present with thousands of products to choose from. Always know or seek to understand the motivation mode behind your customer’s actions and this can lead to your business success.
Focus on your why and stop wanting to engage every customer to buy your products. Put yourself in their shoes and then think of what would want to make them buy from you each time they are in need of the product or services you offered.
Step 6: Research the Demand for your Business
No matter how beautiful your business idea is, always research to know how it is faring in the open market. You must establish the demand and supply curve before investing in any business. The should be ample demand for your product or services.
The basic rule is that demand should be greater than supply if this truth holds your business will strive but if supply is greater than demand then your business will eventually perish. Ensure you do your homework to gather more information for yourself. Hitting the road to know all there is to know about your products and services deeply.
Step 7: Set your Marketing Goals
Now that you have finished your research and have written your business vision, the next thing to do is to set your marketing goals, these will define how your product will look like, what will be the cost, how you will distribute it and the ways you will promote it.
Most businesses do have a marketing plan but will neglect the primary issues like the number of products you will sell, what will be your product development strategy, your price margins, your delivery plans and promotional plans. This should be dully settled.
When you ask yourself these questions they will help define your goals of marking your business.
Step 8: Define your Marketing Strategy
Now that you have developed your marketing goals, you need to define the pathway on how it will be achieved. Questions like how many products you will need to produce and sell, at what profit margins so as to get your desire revenue margins.
- What will be your system of delivery and your coverage area?
- what will be the strategies to promote your business?
- what medium will you use, be very specific about these?
As these will eventually strengthen your plans. Ensure you plan for every eventuality while writing your business plan
Step 9: Take Action
Of course, without action, everything you have done is a waste of time. No matter how perfect your business plan is without action your efforts will not be appreciated.
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Your business plan will provide the direction and focus that you need to take the first step. Writing a business plan isn’t difficult if you know what you should focus on.
Why Write a Business Plan?
Dot 1: Your Own Thinking Process is Solidified through the Planning Process
The planning outline provided in this guide leads you through a series of questions and issues that you should consider when thinking about your business. Remember that you are an investor in your own business. You are the first person who must have confidence in the validity of your business concept.
Dot 2: Your Bank or Financial Institution will need to be convinced of the Viability of your Business, or your Business Expansion
Your business plan serves as a communications tool to inform and influence your audience and reader towards taking some action – providing a loan, extending credit or investing in your business.
Dot 3: Your Business Plan provides some Guideposts in Running your Business.
You will set goals and then, once you are in business, you can measure those goals against the actual performance. Goals should be specific, measurable, achievable, realistic and time-limited – SMART.
Rules on How to Write A Business Plan
First, before we dive into looking at the overview of different chapters of a business plan. Let’s look at a few must-follow rules for writing a business plan;
Rule 1: Keep it short and simple
Business plans should be short and concise. This is because you want your business plan to be read. it is very rare to have someone sit down and read a 100 – 150-page business plan end-to-end. Also, your business plan should be handy, something you continue to use and refine over time.
An extremely long business plan is a huge hassle to deal with these days and guarantees that your plan will be left untouched.
Rule 2: Research – Do your Homework
Before you begin the process of convincing your audience that your business is the latest thing in town – make sure it has a detailed description outline that more or less summarizes the “story” of your business. Find out who your competition is and identify their strengths and weaknesses.
By comparing your ideas to those already in motion, you can quickly assess where your own plan excels and falls short. This way, you can improve your business before it even begins and once it hits the market, you’ll be ahead of the game!
Rule 3: Know your Target Audience
Your business plan should be written in a language that your audience will understand telling them what they need to know. For instance, if your company is developing a complex solution that is not known to your prospective investors or banker.
You need to adapt to a model that they would understand. Ensure to always accommodate your investors, and keep explanations of your product simple and direct, using terms that everyone can understand. You can always use the appendix of your plan to provide more specific details.
Rule 4: Don’t be Overwhelmed
In today’s world, the huge majority of entrepreneurs and business owners are not business experts. Don’t know about you but they’re learning as they go and don’t have degrees in business. Writing a business plan may seem like a difficult hurdle, but it doesn’t have to be.
If you know your business and are passionate about it, writing a business plan and then leveraging your plan for growth will be easy.
Rule 5: Abridge Your Ideas
First of all, it’s important that you summarize your ideas for yourself – this indicates that you have a solid grasp of your plan and are thinking critically about the steps you have to take to ensure your success.
Additionally, lenders and potential partners alike have no interest in flowery phrases or winding word patterns. If you can’t tell them in a few short and direct sentences what you’re trying to accomplish and why they should care, not only will they not take you seriously, they’ll quickly move on to the next proposal.
And don’t forget the business plan’s executive summary, which lends your plan legitimacy because it shows how you are your team are qualified.
An Outline of A Typical Business Plan
Now that we have the purpose of a business plan, the areas to focus on while writing your business plan and the rules of writing a business plan out of the way, let’s dive into the detailed structure of building your plan.
The remaining part of this article will provide the specifics of what you should include in your business plan, what you should skip, the critical components of the all-important financial projections, and links to additional resources that can help kick-start your business plan.
Section 1: Executive Summary
This is probably the most important aspect of your business plan. It is an overview of your business and should communicate your company’s competence to be successful in a competitive market. It summarizes the other sections of your plan and is written last. Ideally, it is 2-3 pages. Read More
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Section 2: Company Description
This is a section where you take a look at the overview of the company. the nature of your business and your competitive advantages should be discussed. Other things to penciled down include Name and location of the business, Company mandate (Mission, Vision, Values, Goals & Objectives, Critical Success Factors, etc.), Location and geological information, company history and status, Competitive advantage. Read More
Section 3: Products and Services
This section expects you to describe in detail your products and services. What are you actually selling, what problem do you solve and how are you solving the problem (or “need”) for your market? Read More
Section 4: Industry/Market Analysis
This section should reflect your knowledge of your industry. You should discuss the characteristics of your target market as well as the size of your target market. Summary of this section includes; Size and growth trends, Economic seasonal technical factors which affect profitability, Target market, and Competition. Read More
Section 5: Marketing and Sales Activities
This is where you will give a detail description of your marketing and sales plan. It should answer questions like how are you going to reach your target market? What marketing and sales tactics will you be using? Read More
Section 6: Management and Ownership
This section must emphasize your management team’s talents and skills. It should also indicate what skills and talents they bring to the company that makes it unique from your competition. Read More
Section 7: Operational Plan
This section outlines how you will run your business and deliver value to your customers. Operations are defined as the processes used to deliver your products and services to the marketplace and can include manufacturing, transportation, logistics, travel, printing, consulting, after-sales service, and so on.
This section should briefly outline how you will implement all of the above and include a brief description of the organizational structure and the expense and capital requirements for operation. Read More
Section 8: Financial Plan
Your business plan isn’t complete without a financial forecast. This section includes the use of funds and long-range financial strategies to liquidate investors. It captures Income statements, Balance sheets, Cash flow charts, three to five-year financial projections (1st year monthly, remaining years annually), Assumptions on which projections are based, Key business ratios, breakeven analysis, etc. Read More
Section 9: Appendix
The appendix is where you should provide all of the documentation that supports the body of your business plan. Include those documents that are required (e.g. financial projections), those that are helpful (e.g. results of marketing studies), and those that assist in selling your idea (e.g. letters of interest from potential customers).
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Now, you have an idea of what is important and how you should tackle your task of writing a business plan and are better equipped to start.
So, if you’re thinking right now about how to write a business plan, sit down and start answering the questions outlined above. It’s the thinking and strategizing part which is actually more important than the writing part. Sure, if you want others to read and/or fund your business, your plan has to read well and be formatted properly.
Remember, it’s the content of your business plan, your strategy and reasons why you’ll succeed, that will prompt others to invest or otherwise join you in your conquest to build a thriving business!
Start your business today by jotting down all those brilliant business ideas, set your goals, define a path and don’t let anyone stops you.
Now, Over to you
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