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How to Write a Business Plan

A business plan is a written document, which will guide to achievement of the goals and aims of a particular business. Simply, it is a road map that direct us to a successful business, the business plan tells us,

  • Who is running the business and what makes them qualified? What do they bring to the table that adds value?
  • By writing a business plan, we can identify who are the competitors to our business and what do they offer and what makes us different?
  • Also, we can identify who is our customers and where are they? How big is the market? What do they want and how will we give it to them? Also, how will we connect with our market?

A business plan can be written either for new business or existing business. There are some steps to complete to write a business plan.

Business plan
Business Plan

Step 01 - Identification of opportunitie

The first step to the new business is the identification of opportunities. Opportunity is a set of advantageous conditions that create a need for a new product or business. Entrepreneurs recognize opportunities and turn them into successful businesses. Availability of resources, industry, market sudden changes, problems, and new trends in the society or gaps in the market can be a good opportunity.

Step 02 - Generating business ideas/ developing concepts

The concept of idea generation can be used to create value. A critical milestone in the process of founding a business. Every successful business has started as someone’s idea.

Step 03 - Screening the business ideas

Once business ideas are generated, they can be assessed to find out the feasible ideas, and further, those ideas can be ranked from the most feasible ideas to the least. The main reason for screening the idea is to find the feasibility of the idea with respect to the Strength of the Idea, Marketing Feasibility, Operational Feasibility, Financial Feasibility, and Management Feasibility. Business idea screening techniques can be either qualitative or quantitative and financial or non-financial. There are two types of screening as Basic or Primary Screening and Comprehensive Screening. Basic or primary screening provides a mechanism for quick assessment of the business ideas. Critical areas of the business idea can be taken into this assessment.

Once the ideas were built, they can be referred to the second or comprehensive screening. This is a more stringent screening that can be used to identify the best or most feasible idea. This requires deep insights than basic screening. Research, surveys, deep analysis of secondary data, etc. are needed.

Step 04 - Ranking the business ideas and selecting the most feasible one.

After screening the ideas, then they are ranked according to their feasibility.

Step 05 - Developing a business plan writing checklist and writing the business plan

The business plan checklist is written by including the most important sections that we include the business plan. The checklist will guide us to write a much effective and successful business plan through a step-by-step process.

Executive Summary

An executive summary is a brief introduction to the business. The purpose, significance, and uniqueness of the business are explained in this section. And the essence of the Marketing Plan, Operational Plan, Management Plan, and Finance Plan is briefly explained here.

State whether your plan is for internal use only or not and whether it is for seeking funds or not.

If you are seeking funds, specifically point out that purpose; Ex: for a lender, for angels, or for a venture capitalist, etc.

General Information of the Business

In this section, all the information about the business is provided. First, general information such as the Name of the business, Emblem, Vision statement, Mission statement is included. Additionally, a short description of the business is included. As an example,

  • what are the values of the industry,
  • what is the legal structure of the business, and
  • what type of product or what type of service will provide etc.

Next, the contact information of the business is included. The address, contact numbers, email address, social media contacts, the web should provide as contact details. If there are any branches, showrooms, those details are also included. Then, it is better to attach a map of the business location.

Finally, information on the Founder/s, Board of management and structure, Name and qualifications of secretaries, auditors, consultants, Official banker/s, Uniqueness and special capabilities of the business and management are included. If there are any Intellectual properties, Achievements, and History of the business that information is also included.

Marketing Plan

To assess the marketing environment, we should clearly identify what are the goals, objectives, and overall marketing strategy, and what are the products, and what are the prices of the products and pricing strategies are planned. Additionally, it should be considered how to deliver the customer value and communicating with the customer.

Consumer markets, business markets, and competitors are analyzed by Conducting marketing research and forecasting demands. Break-even analysis is widely used to analyze the market. Market segmentation and targeting, creating brand equity and brand positioning, and Managing customer relationships are important steps to be considered when developing a marketing plan.

Details on the nature of the coordination among other business functions and departments, marketing staff and related cost, marketing supply chain, action plans, control plans, required assets and related cost, total marketing cost, are included in this section.

Operational Plan

The operational plan describes how to operate the started business. Corporate goals and operational goals, corporate strategies, and overall operational strategies are described in this section. Also, a description of cost or price, quality of products or service, delivery speed, delivery reliability, coping with changes in demand, flexibility and new product development speed, other product-specific criteria such as technical support, superior after-sales support is included in this section.

Important details that should be included in the operational plan are,

  • Product design and development
  • Manufacturing process selection and design (Break-even analysis)
  • Job Design
  • Selecting a Location
  • Determine the work methods.
  • Forecasting for production planning
  • Facility location strategies
  • Capacity planning
  • Production layout and assembly line balancing
  • Quality management strategies
  • Production planning
  • Material requirement planning and inventory control.
  • Managing for productivity
  • Strategies for operations re-engineering.
  • Supply chain management

Management and Administration Plan

This section gives the information of management and the administration of the business. First, the mission of the organization, corporate goals, strategic objectives, corporate strategies, the management structure of the organization is included. Then the key positions of the organization and their Job title, task/duties, and responsibilities at a glance are described.

Strengths, weaknesses, opportunities and threats-Managerial feasibility analysis and justifications, Policies, procedures, practices of the organization (In general management and administration perspective) Summary profiles of Secretaries, Auditors, Consultants, Human Resource Management functions also described here.

Additional details that should be included in the management plan are,

  • Details on decision making, meetings, communication and other coordinating activities
  • Managing growth and development goals and strategies
  • Activity plans
  • Assets and related cost
  • Staff and related cost
  • Total management and administration cost
  • Controlling plans
  • Nature of the coordination among other business functions or departments

Financial Plan

The financial plan is a detailed description of cash flows and funds. Initial cash flow, operational cash flow, and terminal cash flow are described under cash flow. Startup costs on land, building, furniture, etc., and working capital requirements are the initial cash flow. Income, expense, and working capital change are the operational cash flow. The cost for scrap and release of working capital is the terminal cash flow.

Other areas that should be concerned in financial planning are, assessment of financial viability through financial statements analysis, analysis of tax concessions, etc. and variance analysis, and financial controlling. Equity/ Debt/Mix and cost of funds are described under funds.

Additionally, projected Financial Statements on manufacturing and trade account, income statement, financial position, and cash flow statement are included under the financial plan.

Annexure

Documents that can be included in the annexure,

  • Personal resumes (Work history, educational background, professional affiliations, and special skills and proof, etc.)
  • Owner’s financial statements
  • Agreements
  • Contracts
  • Research or Survey reports/details analysis
  • Other legal documents (Articles of incorporations, partnership agreements, licenses, copyrights, trademarks, patents)

Step 06 - Conducting a pre-feasibility analysis

Before starting the business, it is better to conduct a pre-feasibility analysis to identify the market. This analysis is carried out by,

  • Introducing prototypes or trial productions
  • Trial servicing
  • In the day of life research
  • Other pre or test marketing activities
  • Identifying possible changes/deviations or realities of plans

Step 07 - Developing implementation checklist/s

Identifying and list down all the activities to be taken with the implementation, based on the relevant action or activity plans.

Step 08 - Implementation

Launching the venture and starting the activities as planned and with the outcomes of the pre-feasibility analysis.

Step 09 - Follow up

Monitoring planned activities and realities, identifying, and taking corrective actions for the poor performing areas or deviations if any.


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References and Attributes

Image by Tumisu from Pixabay

Image by StartupStockPhotos from Pixabay

 


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