Experts say that a strong business plan is one sure step in the direction of success. So, what is a business plan in the first place? It is defined as a document that outlines the functional and financial objectives of a business. It also contains details of the budget involved and the goals to be achieved.
Everything on earth is tending to become compact. Gone are those days when a sea beach was described in a thousand words. Today, a similar description is possible with a powerful visual and a string of strong adjectives in only a few words. A mobile phone today is slightly bigger than your thumb. Similarly, a business plan is no longer a document of a hundred pages. Nobody wants to know your business. They want to know your views, your goals, your objectives and your plan of action.
How Well Can A Business Plan Be Implemented?
o Simplicity of a business plan – is it understood by one and all? Are its views and objectives clear?
o Specificity of a business plan – are the contents measurable? Are all the activities dated (initiation to completion)? Are all the actions distributed among personnel clearly?
o Real nature of a business plan – are the objectives and targets real? Are the goals set within a specified time achievable?
o Totality of a business plan – is the plan complete? Does it have all the necessary elements to outline your business goals?
A business plan has multiple uses. It can be used to start a new business enterprise, take a loan or to find good investors. There are many other reasons for which you need a business plan. You should first find out why you need a business plan.
Why Do You Need A Business Plan?
o Outline objectives and set goals to achieve them
o Prepare regular business review outlines
o Start a new business enterprise
o Decide on a value on a business for sale and legal issues
o Outline agreements between business partners
If business plans are conceived for different purposes, there must be different business plans for different kinds of ventures. Business plans are also known as growth plans, internal plans, investment plans and so on and so forth.
If your business plan is for internal study and revision, there is no need of background details of your organization because you are already aware of them. You need to add that only if your business plans are meant for banks and other institutions.
What Are The Different Types Of Business Plans?
– The most basic of business plans are the start-up plans that clearly outline the steps for a new business venture. They include details of service provided or product offered, market value of the same, implementation strategies, market and financial analysis. The basic structure consists of a summary of the company, ending with details of financial transactions and expectations for the first year.
– An operational business plan contains details of dates, deadlines and milestones. It is often referred to as an internal business plan.
– A strategic business plan aims at higher levels of target and does not deal much with dates and deadlines. This business plan is more of future and growth oriented and focuses less on facts of the company.
– A growth or expansion business plan focuses more on one or more subset of the business. There are variations of this kind of business plan. If it is meant for a new investment, it will obviously include the background of the company.
– A feasibility business plan is your entire business in bulleted form. It includes the summary, the mission and the vision of the company, the USP of the business enterprise, expected financial outcomes etc. The main purpose of this business plan is to test whether this business is worth a venture at all.
The Seven Points Of Business Plans
Business plans usually cover the following 7 points. Of course, they will vary in detail, depending on the purpose of the business plan.
– Mission Statement – your business plan must explain clearly why you want to start a particular kind of business in the first place. It doesn’t have to be long, but it needs to convey the message clearly.
– Business Description – this is the place where you talk about your business. What is it that you are trying to sell or provide? What is the USP of your business?
– Goals in view – here, you describe both your short term and long term goals. Short term goals may include your plan to acquire office space, provide a proper business name, apply for a business license etc. Long term goals include answers to where you see your business ten years down the line, opening new stores etc.
– Prospective Customers – who is your target audience? Why will they need your service or product? How well do you understand their needs?
– Competition Analysis – this helps you rank your business venture in the market. Who are your competitors? If their focus area is too competitive, try for a niche market that is comparatively less competitive.
– Financial Considerations – be realistic and optimistic about your finances. Make sure to spend only that much with which you are sure to receive returns. Or else, go in for a small business loan till your business can take care of its own expenses.
– Marketing – sell your ideas before you sell your products. Advertise your products everywhere you can think of. Don’t miss out on both offline and online publicity. If you get a chance, exhibit your product or service at local communities and organizations.
Do’s And Don’ts Of Business Plans
Your business plan should:
a) Set concrete goals and deadlines
b) Distribute work among people and departments and set deadlines to achieve the goals
c) Maintain a steady ratio of implementation to strategy to 10:1
d) Provide a platform for regular review and discussion
Your business plan should not:
a) Display your knowledge about your field of expertise
b) Be too lengthy – people lose interest easily
Not all businessmen and women are good planners. It has often been seen that a business fails because of the lack of a good business plan. That is one of the cardinal mistakes for an entrepreneur.
Business Plan Mistakes
Experts have identified some common mistakes regarding business plans. They are:
– No business plan – many business ventures begin without any plan. Plans are written out in a rush only if the clients or banks or investors ask for the same. It is often seen as unnecessary because the business is more important. Imagine the condition of a house without a plan. You will get lost midway in heaps of concrete and steel. Similarly, you will get lost in ideas and desire to implement them.
– Cash is more important than profits – business is not the same as profits. Cash is the main player. Only if you have cash to spend in the beginning, will you get profits at the end of the day.
– Ideas don’t sell – your business sells because of hard work, perseverance, cash and a lot of common sense. Your idea does not have to brand new. Old wine is better than new ones. Why? People trust age and experience.
– Fear factor – a business plan is as necessary and as routine as making a travel plan. You don’t need to be Einstein to chalk out a business plan. You just need to think straight and pen your thoughts.
– Specificity wins – focus on tangible results, instead of trying to be the best. Results matter and they tell you everything.
– Fit all business plans – your business plan should work for bankers and investors as well as internal review and corrections. Don’t make individual business plans for individual purposes. Rather, concentrate on your business.
– Everything cannot be important – you can have only a few priorities. 20 priorities are vague and they clearly show lack of strategy and of goals.
A business plan is the first step of starting a business. It is neither easy nor difficult. What is a business plan about? How do you implement a business plan? What do you include in a business plan? What are the ‘must have’s’ and ‘have not’s’ of business plans?
Whether it is travel, study, cooking or any other activity involving a process, planning is usually the first step. The same holds true for business. Business plans are probably more important than the business itself. For example, the plan for a house is more important than the house itself, though it is the house that people remember and not the plan. But the house wouldn’t stand without the plan, would it?
