A business plan is a written document that defines in detail that, how a business (generally a startup) characterizes its goals and how it gets success. It’s like a written roadmap for the firm from marketing, financial, and operational standpoints. Business plans are essential records used to draw funds for a company that has not established a proven track record yet. They are additionally a good way for organizations to keep themselves on target going ahead.
Although they're particularly valuable for new businesses, each company must have a business plan to move forward. Preferably, the plan is reviewed and updated with time in order to check whether goals have been met or have changed and evolved. Most of the time, a new business plan is designed for established businesses that have chosen to move toward a new path.
Understanding Business Plans-
A business plan is a principal document that any startup business needs to have made, before initiating operations. Banks and investment firms in fact always make a viable business plan before providing funds to new businesses.
Working without a business plan isn't generally a smart move. Not many companies can keep going long without one. There are certainly more benefits in designing and sticking to a decent business plan—including having the option to research and choose the right idea without putting too much money and time into any business opportunity.
A decent business plan should include all the projected expenses and potential pitfalls, which a business can encounter. Business plans, even among rivals in a similar industry, are different. But they all tend to have similar essential elements, including an executive summary of the business and an elaborated description of the business, its services, and its products. It additionally states how the business, plans to achieve its goals.
The plan must incorporate at least an outline of the industry of which the business will be a part, and how it will separate itself from its potential rivals.
Elements of a Business Plan-
The length of the business plan depends on the type of business and it significantly varies from business-to-business. All the information about the business should fit into a 15-to 20-page document at most. If there are crucial elements of the business plan that occupy a lot of space, for example, applications for patents, they ought to be referred to in the plan and included as appendices.
As referenced above, no two business plans can be the same. But they all are based on similar elements. Below mentioned points are common key parts of a business plan.
Executive summary:
This section of the business plan includes the mission statement along with all the data regarding the company's administration, employees, operations, and location.
Products and services:
Here, the company can explain the products and services it will offer, and may likewise incorporate costs per product or service, the lifespan of a product, and benefits to the customer or clients. Different components that may go into this segment incorporate the production and manufacturing procedures, any patents the company may have, as well as proprietary technology. Any data about research and development (R&D) can likewise be included here.
Market analysis:
A company requires a decent grip and knowledge of the industry and targeted market. It will make sure, who the competitor is and how it factors in the industry, alongside its qualities and weaknesses. It will likewise explain the demand for what the businesses are selling and how simple or difficult it might be to get market share from pre-settled or future competitors.
Marketing techniques:
This includes, how the company will attract the customer and maintain its loyal consumer base. To achieve this, a clear distribution channel must be outlined. It will likewise include advertising and marketing campaign plans and through what kinds of media those campaigns will exist on.
Financial planning:
To make this business plan attractive for other parties, the company should incorporate its financial planning and future projections in the plan. Financial explanations, balance sheets, and other financial data might be included for effectively settled businesses.
Budget:
Every company needs to have a budget set up. This incorporates costs of staffing, development, assembling, marketing, and some other costs related to the business.
Types of Business Plans-
1. Startup Business Plan
Arguably the most common type of business plan, a startup business plan is used for brand new business ideas. This plan is used to take a business concept and lay the foundation for its eventual success.
The biggest challenge with the startup business plan is that it requires its writer to completely start from scratch. Startup business plans start with a blank word document, and before they are finished, need to reference existing industry data and explain unique business strategies and go-to-market plans.
2. Business Acquisition Plan
Investors will still want to see a business plan to acquire funding to purchase an existing business in order to see how its new owner will run the business.
What will change and what will stay the same under new ownership, and why? Additionally, the business plan should speak to what the current state of the to-be-acquired business is, and why it's up for sale.
For example, if someone is purchasing a failing business, the business plan should explain why the business is being purchased and what the new owner will do to turn the business around, referencing previous business metrics, sales projections after the acquisition, and a justification for those projections.
3. Business Repositioning Plan
When a business wants to save itself, reposition its brand, or try something new, some CEOs or owners will want to develop a business repositioning plan.
This plan should:
1. Acknowledge the current state of the company.
2. State a vision for the future of the company.
3. Explain why the business should (or must) be repositioned.
4. Outline a process for how the company will adjust. Companies planning for a business reposition do so – proactively or retroactively – due to a shift in market trends and customer needs.
4. Expansion Business Plan
Building onto a successful business venture with another location typically requires its own business plan, as the project may require a new location, focus on a new target market, and demand more capital.
Fortunately, an expansion business plan allows its writers to reference sales, revenue, and successes from any previous location(s). However, as great as a reference as these points can be, it's important to not be too reliant on them since it's still a new business that could succeed or fail for a myriad of reasons.
Conclusion-
A business plan is not meant to be a static document. As the business grows and evolves, so too should the business plan. An annual review of the plan allows an entrepreneur to update it when taking markets into consideration. It also provides an opportunity to look back and see what has been achieved and what has not. Think of it as a living document that grows and evolves with your business.
