WHAT IS A BUSINESS PLAN?
A business plan is a written document that describes your company, its objectives and strategies, your target market, and the financial forecast of your business. It is important to have a business plan because it will help you set realistic goals, in obtaining external funding, measure your results, clarify your business needs and establish reasonable financial forecasts. Preparing a business plan will also help ensure the proper functioning of your new business and give it every chance of succeeding.
Obtaining financial assistance to launch your new business will be directly related to the quality of your business plan. To be considered a viable candidate to receive funds from a financial institution or investors, you must demonstrate that you understand all aspects of your business and its ability to generate profits.
A business plan is more than a simple document to show lenders and investors. It is also necessary to help you plan the growth and progress of your business. The success of your business may depend on your plans for the future.
Here are examples of questions you can ask yourself when writing your business plan:
- How will I make a profit?
- How will I continue to run my business in times of sluggish sales and falling profits?
- Who are my competitors and how will we coexist?
- What is my target market?
WHAT ITEMS SHOULD BE INCLUDED IN A BUSINESS PLAN?
Although business plans vary in length and scope, all successful business plans contain common elements.All business plans must include the following:
- summary (business description)
- description of your company project
- strategy marketing and sale of a business plan
- your team
- financial projections of a business plan
- other useful information
THE SUMMARY (BUSINESS DESCRIPTION)
The summary outlines the main points of your business plan and is often considered the most important section. At the beginning of the plan, the summary is usually the first section read by a lender or a potential investor. The summary should:
- understand the main points of each of the other sections to explain the basics of your business;
- be interesting enough to entice the reader to continue reading your business plan;
- be brief and concise – no more than two pages
Even if the summary is the first section of the plan, it is best to write the last, once the final version of the other parts of the plan was completed.
DESCRIPTION OF YOUR COMPANY PROJECT
In this section of your business plan, you must describe what your business, that is to say, its products and / or services and your plans for the company. This section generally covers the following topics:
- who are you;
- what you do;
- what you have to offer;
- the market you want to target
Remember that the reader does not necessarily have such a good knowledge about your company and its products and services. So avoid using complex terms. A good idea would be to ask a person who has nothing to do now to read this section of your plan to make sure that everything is understandable.
Your plan should particularly address the following points:
- if it is a new business, purchase an existing business or expanding an existing business;
- the business sector to which your business belongs;
- the uniqueness of your product or service;
- the benefits of your company over the competition;
- the main goals of your company;
- the legal structure of your business (sole proprietorship, partnership, corporation).
You can also specify the date of registration / incorporation, the name and the business address and the name and contact information of contacts.
MARKETING AND SALES STRATEGY OF A BUSINESS PLAN
An effective business plan includes a section that describes the specific activities that will serve to promote and sell your products or services. A section on well-developed sales and marketing indicates that you have a clear idea of how to market your product or service and can answer the following questions in order to enlighten the reader:
- Who are your customers? Do some research and get detailed information on the types of customers who have expressed an interest in your product or service. Describe how you are going to do it to know the existence of your business to potential customers.
- How will you reach your customers? You have to know your customers and the best way to approach them. Research will help you to find the most effective way to reach your target customers, whether online, by phone or in person.
- Who are your competitors? Once you have answered this question, you need to determine the strengths and weaknesses of your competitors and use these information to evaluate the benefits and threats that might result for your business.
- How will you position your product or service? Describe what makes your product or service unique to the market in which you try to break through.
- How are you going to price your product or service? This information will describe your pricing strategy, including incentives, wholesale prices and / or sales group.
Do not underestimate the importance of this section of your plan. Investors need to know that you and your staff have the right balance of skills, experience and motivation that will lead to your business success. This section also describes the people who work in your business and how you plan to manage your activities.
This section may include among others the following information:
- a brief table or chart of the company;
- Biography managers (including your own);
- who does what, with a brief job description for each position;
- the skills needed for each position;
- any other relevant information concerning the personnel.
It is also desirable to describe briefly any recruitment or training plan, including the necessary time and costs.
This section of your business plan describes your business needs, including your daily needs, your facility needs, your IT systems requirements management and information technology, and any improvement project planned. The elements that are typically included in this section:
- The daily operation – description of hours, seasonal fluctuations, suppliers and their credit terms, etc.
- Infrastructure needs – information on the area and location, leases, supplier prices and license information.
- The management information systems – inventory control, account management, quality control and monitoring of clients.
- Needs for information technology (IT) – your IT systems while consulting and support services that you use and a description of any technological development you plan to undertake.
FINANCIAL PROJECTIONS OF A BUSINESS PLAN
Your financial projections turn your plan into figures. As in any effective business plan, you must provide financial projections for your business. Your forecast should cover the next three to five years. However, forecasts for the first 12 months should be more detailed and include assumptions regarding costs and revenues so that investors can clearly understand your strategy.
Your financial forecasts should include the following:
- cash flow statements – it is the flow of cash and its monthly evolution of the 12 to 18 months. They include working capital, salaries and sales;
- forecasts of profits and losses – these are the benefits you expect achieve, based on expected sales, products and services costs, and indirect costs;
- Sales forecasts – this is the amount of money you plan to achieve sales of your product and / or service.
Other things to consider:
- How much money will you need if you are looking for external funding?
- What guarantee can you offer to lenders?
- How will you repay any borrowings?
- What are your sources of income and income?
- The forecasts should cover a range of scenarios.
- Examine the risks and develop contingency plans to mitigate these risks.
- Examine the benchmarks / industry averages for your type of business.
It is important to do your research to find out how your business is compared to other small businesses in your industry.
OTHER USEFUL INFORMATION
The following sections are not always necessary but can enhance any business plan:
- Implementation Plan – This section lists the expected completion dates, regarding different aspects of your business plan, your business objectives and milestones.
- Annexes – these should include various accompanying documents, such as permits and authorizations, agreements, contracts and other documents to support your business plan.
WHO SHOULD WRITE MY BUSINESS PLAN?
It is you, the entrepreneur, who must write your business plan. This is your business and therefore your business plan; So it is you who must take the initiative to draft it. However, do not hesitate to seek outside help from your management team, advisors, accountants, bookkeepers, copy editors and / or others’ experience.