You would have heard of the importance of a business plan and how it is the most important document aside from the last will and testament – but what exactly is it?
What is a Business Plan?
A business plan is a document that contains the business description and makes projections about the future of a business. The plan deals with the financial aspect as well as the general running of the business. It addresses the goals of the entrepreneurs as well as the investors, because both have the same objective – to create a successful business.
It sounds simple enough but it is in reality a process that needs to be carried out with a high level of focus, taking into consideration every single aspect of a business. This requires an in-depth understanding of what will make it a successful venture.
Why is it Needed?
• A business plan helps you cover all the bases and anticipate some of the pitfalls that may be encountered in the future and recognize problems before they become insurmountable.
• It will help you determine if you are on track or not, several months down the road.
• It will help you understand how money flows through your business.
• It will give you an idea of your financial strengths and weaknesses.
• It will help you determine your future potential.
• It answers questions potential backers/investors may have before they lend you the money.
There are all sorts of business plans, but the following constitute the important components of a business plan for a start-up.
Components of a Business Plan
There are three components to a business plan:
• Organizational Plan – Gives an overview of the organization, description of the business, business model, company’s strategy, long-term and short-term goals and how you are going to meet those objectives.
• Marketing Plan – This includes your marketing strategy that talks about how you are going to get customers, make sales and achieve profits. This also consists of the market analysis, sales strategy, advertising and public relations.
• Financial Plan – This contains details about the sources of funds and projections of income and cash flow.
While all the three components are useful, the marketing plan holds utmost importance.
Do not create a business plan in a hurry. Giving it enough time only ensures you are not missing out on anything. Planning a start-up has to be detailed, for it to be successful. Ideally, this planning needs to be done while you are still working (if you are employed). This ensures that you have income coming in for a while, at least during the planning stage. Creating business plans usually takes anywhere from a couple of weeks to a couple of months or even more, based on the business and the number of people brainstorming.
Business Plan Model
If you look around, you will find plenty of business plan templates and models to suit your needs. You can take a look at the samples on the net. You can even talk to other successful entrepreneurs and understand what is needed. While the content in a business plan is of utmost importance, the form needs to be attractive too. It should be professional and clean.
Point of Emphasis
Based on your strong point, you can emphasize on the management team or the market opportunity that you are going to be chasing. If the management team has no experience, then you can focus on the great marketing opportunity that will be successfully met by your start-up. If the management team is high-profile and experienced, then you can highlight this in the plan. A great team with an okay opportunity is more likely to be funded rather than an okay team with a great opportunity.
This is the reason, it becomes important to build a founding team, as this increases the chances of success. Research reveals that start-ups with multiple founders are far more successful and a lack of a management team is considered to be a company killer. It helps to have team members who can contribute at various levels.
You are selling the team and the marketing opportunity; so make the business plan according to this. A business plan should be written and laid out well enough to give you as the business owner and the investors, if any, a clear picture of the business long into the future.