BUSINESS PLAN

Definition:
A business plan is an overview of the business idea, as well as a strategy
for building and running it. It’s a formal written document that answers
important questions about your company.
A business plan includes:
 Overview and objectives
 Company description
 Products and services
 Employment opportunities
 Market plan
 Competitive analysis
 Funding needs
 Operational guidelines
 Structure appendices
Why do we need a business plan? (Importance)
A business plan serves both internal and external stakeholders, and is crucial to
developing your budding company in multiple ways. A business plan can help
with:

 Guidance
A business plan can act as a roadmap, helping you and your team to stay focused
on your goals
 Loans
Most banks need to review your business plan before they can approve a small
business loan. Your business plan shows the loan officer you’re serious about
your new venture and that you’ve considered the challenges and risk involved.
 Lease
Similarly, a landlord may ask to see your business plan before confirming a
rental agreement. Commercial leases are typically for three to five years, and
landlord want tenants they believe will be in business for at least that long.
 Investors
If you want to bring investors into your venture, you’ll need to prove the
viability of your company. A well developed business plan shows that you’ve
done research on the market, your competition and how to succeed.
 Partners
Looking for a co-founder? In the same way a good business plan will help you
draw in investors; it can also help to attract potential partners.

Generating a business plan involves putting your ideas and research into writing.
Here’s how to create a business plan in three simple steps:

A) Come up with a business idea

In order to write a business plan, you need a winning business idea. If you’re an
inspiring entrepreneur still looking for idea, start paying attention to common
problems you and the people around you encounter. For example, you might
notice your newlywed friends complaining about how hard it is to find a
photographer who doesn’t take cheesy engagement photos. This problem can
inspire you to start your own photography business. While you’re brainstorming
remember that successful businesses solve problems.

B) Do your research: element of a business plan

Once you have a business idea, you are excited about start conducting research
to flesh out your business plan. Use your business plan to answer the questions
others will have about your business and how it will be successful. Then
organise your research into the following categories:
 Executive summary
This section serves as a quick preview of what will follow much like the
opening paragraph of an essay. Use the executive summary to quickly explain;
- What is your company’s mission?
- What are your products or services?
- What is your company’s story?
- What are your plans for growth?
 Company overview
Think of the company overview as an elevator pitch. This is another opportunity
to succinctly answer key questions that will be elaborated on later, such as:
- What will the business do?
- What problems will it solve?
- Who is your ideal customer?
- How are you different from the competition?
 Products and services
Use this section to expand on your business model, answering questions such as:
- What will the company sell?
 - How will the company make money off of those products or services?
- What is your pricing model? Be specific
- How does your pricing compare to what your competitors charge?
 Market opportunity
Those reading your business plan need to know why your business will be
successful. Do the necessary market research to identify your company’s
viability here. Answer questions such as:
- What is the size of your target market?
- Who is your ideal customer?
- What’s your potential for revenues?
- Who is your competition?
- How will you set yourself apart?
 Marketing plan
Here is where you need to explain how you’ll reach your customers. Don’t
forget to include digital marketing tools like website, a social media presence
and an email marketing strategy. Answer questions such as;
- How will you sell your products or services?
- Will you sell directly to consumers or to business?
- Will your products be sold individually or wholesale?
- If you choose a third party reseller, what kinds of retail outlet will you
target?
- What kind of advertising effort will you focus on?
 Operational plan
Parse out company logistics in this section. Detail as much as you can about
how you intend to run your business. Answer the questions such
- How will products be manufactured?
- Where will your offices/retail location be?
- What kind of a staff do you need?
- How do you plan to expand the business over time/
 Finances
Investors and loan officers will be particularly interested in the financial section
of your business plan. Be thorough in your research and planning. Answer
questions such as:
- What investments do you already have?
- How much more funding do you need?
- What are your current account balances?
- What is your sales forecast?
 Once you’ve thoroughly answered the most important questions about your
proposed business, you’ve essentially created a business plan. All that’s left
to polish it.

C) Apply the finishing touches to your business plan

After you have written your business plan, go over it with a fine toothed comb.
Typos and grammatical errors will make you and your potential business seem
unprofessional. It is a good idea to give it to a friend who can look fresh eyes.
You should also eliminate any extraneous or redundant content. Investors and
lenders don’t want to read a book about your business. Be respectful of their
time and present them with a business plan that is concise and clear.

What are the characteristics of a great business

plan?
An excellent plan works for your company and keeps everyone on the same
page. There isn’t a lot of ambiguity in it, and all things are listed in an orderly
fashion that’s easy to absorb.

The format of the business plan may be almost as important as the words within
it, so use bullet points, headers, bold print, and other tricks to keep the reader
engaged.

Whether you already have a business plan written and want to edit it to
perfection or you need to start from scratch, there are six characteristics every
strong plan has.

1. Clear language

It might be tempting to throw in a bunch of industry jargon to show your

knowledge of your niche. Unfortunately, most lenders won’t know what you
mean. It’s much better to stick to language anyone can understand. You never
know who you’ll need to share your business plan with.

Read over the plan several times for typos and clarity. Read out loud so you can
“hear” the words. You’ll catch awkward phrasing by speaking the words. You
can never have too many eyes on the plan. One person might catch a particular
spelling error while another sees the grammatical errors.

Get feedback from your employees, family, mentor, and friends. You don’t have
to follow every suggestion, but you should consider what everyone says and
choose the things that make the most sense for your business model.
Look at the business plan through the eyes of someone outside the industry.
Does everything make sense? Are there any phrases someone might have to stop
and look up? You don’t want the reader to be thrown out of the flow of the text.

2. Employee recognition

Your business plan should include a layout for employee recognition.

Developing a strong workplace culture benefits your brand in numerous ways,
such as creating staff loyalty and retaining your best people. It’s difficult for a
company to thrive and grow without focusing on its workers.

When employees receive recognition for their accomplishments, they are 82%
happier in their jobs. They’ll outperform workers in a company without the plan
for an excellent culture. If you aren’t quite sure what your company culture
should be yet, just make some notes on the things you’ve loved about your
favourite places to work.

3. Realistic goals

While you might love to run a multi-billion-dollar conglomerate, most small

businesses stay relatively small. That isn’t to say you can’t find great success as
a small business owner, but make sure your goals are achievable.

As you work through the potential revenue numbers, pay attention to what
others in your industry make in a year. You might be able to exceed that by
10%, but thinking you’ll make four times what your nearest competitor does
may not be very realistic.

Making your goals too lofty may hurt your chances of securing financing, too.
Those considering investing in your business may feel you don’t fully
understand the typical earnings of your industry.

4. Great mission statement

The best business plans outline the purpose of your company. Why did you start
the business in the first place, and how will you leave your mark with the brand?

For example, a small landscaping company called Massey Services shares its
mission statement on its website. Their overall goal is total customer
satisfaction. Everything else in their statement on their webpage ties into that
philosophy. They also want to build long-term relationships, they want people to
trust them, and they value truth and integrity.
When you have a strong mission statement, it drives everything else you do. If
your focus is on building relationships, you’ll develop a company culture based
on interactions with employees. Your mission statement might arguably be the
thing about your company that never changes.

5. Methodology for results

Make sure your business plan has a way to track results over time. Lay out the
methodology of any facts and figures used to estimate revenue or what your
costs will be. Then, check against those assumptions from time to time to make
sure you’re hitting the right beats.

For example, if you plan to hit a certain level of revenue by the end of the first
year, how can you break that down into quarters, months, and weeks? What is
the best way to make sure you achieve your goals?

You can’t fix mistakes or make adjustments if you don’t know where you are in
the journey. Pay attention to how quickly the brand moves toward objectives
and make adjustments as needed.

6. Foundation for marketing strategies

How do you plan to get the word out about your brand? You must have a
marketing strategy that makes sense for your budget and your philosophies as a
brand. Perhaps you plan to work exclusively with online influencers. How much
will you allocate to the budget for influencer marketing?

Take time to study who your target audience is and create buyer personas
representing the average person who’ll buy from you. While you might need to
tweak your personas from time to time, a solid plan, in the beginning, gets
things off on the right foot and helps you bring in new customers.

Figure out how much you’ll spend online and offline on marketing efforts.
Where can you reach your average customer? Do they mainly hang out on
Facebook? If so, much of your budget can go to Facebook ads. On the other
hand, if they use TikTok and rarely visit Facebook, you might want to put more
time, energy, and finances into building an audience on the newer platform.

7. It fits the need of your business

The best business plan for your company takes into account why you need a
business plan in the first place. Are you going for funding, using the information
to improve internal operations, pitching your concept to investors, or perhaps
communicating your goals to employees?
There are many different reasons you’ll utilize a business plan. They aren’t one-
size-fits-all. You may even find you need addendums or additional plans to
match the needs of your business at any given time.

If you intend to use your plan in-house to motivate employees or stick to your
goals, a one-page plan may be all you need. You can also use a shorter version
to test ideas you have and see how they might match the goals of your company.

On the other hand, a traditional full-length plan works best if you need funding
from a bank or want to pitch a concept to an outside investor. You can also use a
longer plan to get feedback from a mentor or business coach.

8. Your strategy is realistic

In a recent Gartner Execution Gap Survey, approximately 40% of leaders said

their enterprise accountability and leadership were not aligned on an execution
strategy. If your business plan doesn’t lay out how the business operates, there
may be too much room for interpretation that causes dissent within the company
and makes people work against one another instead of as a cohesive unit.

Starts by ensuring different operational milestones within your plan are

attainable. For example, if you share a financial forecast, is it realistic? Based on
current revenue, can you realistically achieve your goals? If you’ve brought in
$200,000 per year in revenue for the last few years, don’t expect to jump to
$400,000 in the next quarter. Make a plan for increasing revenue – but in
increments that make sense and are achievable.

You don’t need an unrealistic plan. Company leaders and employees will only
grow frustrated and discouraged if they’re unable to hit any target goals laid out
in the plan.

9. Clearly identifies assumptions

When you’re writing out a business plan, you may not have all the answers. At
best, some of the information is an assumption based on outside data, past
performance, and any testing you’ve completed. There will be times when you
make a mistake in your estimates.

Be upfront about what your assumptions are when writing out your plan. Did
you assume the company will increase 10% in productivity this year because it
did in the last few years? Share your thoughts on why you think this is
achievable based on past factors, but also make it clear it’s a guess. In reality,
the company may over-or-underperform on those expectations.
Show what is an assumption also point to what might need to be updated or
refined after a few months. Consider these areas to revisit frequently for updates
or to set new goals.

10. Easy to communicate with the right people

Who is your audience? Knowing who will look at your business plans allows
you to create it in a format you can share with the right people. Consider factors
such as how easily scan able the text is and what it looks like in different
formats, such as a document or PDF file.

Who are you sharing it with, and how will they use it? For example, if you
include any links, will the person be able to click on them and go directly to the
page you want them to go to? Is the viewer likely to read the plan on a mobile
device? How well does the format adapt?

Consider who you’re sharing it with and how they’ll need to use it to make sure
you offer it in the best format for viewing by that individual. You may even
want to save your business plan in a variety of different formats.

The 7 business functions can be classified as follows:

 General Management.
 Marketing.
 Human resources.
 Finance.
 Accounting.
 Production.
 Public Relations.

OTHER FUNCTIONS OF BUSINESS PLAN

Short-term goals

A business plan helps you to define, for the short term, where you want your
business to go. Because most people write a business plan when the business is
new--or even still in the formative stages--providing immediate goals can be one
solid method for defining exactly how you want your business to run right out of
the box.

Long-term goals

A good business plan will define in an unequivocal manner where you want
your business to go. Some business plans will outline a two-, five- and 10-year
plan, while others will simply identify long-term goals. The goals should be
realistic; this part of the business plan should be the one that you give the most
attention to. Having a solid long-term plan helps you to define how to operate
now.

Financing

A good business plan will identify costs, sources of funding and expected
income. Consider doing proper research before you add this element of the
business plan; it’s important that your numbers are accurate, especially if you
will be presenting your business plan to the bank or potential investors.

Business Strategy

Use the business plan to identify your overall business strategy. You can
identify how you plan to get and retain customers, get funding, improve your
technology, deal with difficulties, send shipments, grow your business, hire
employees and any other aspects of running your business.

Though it might not be read often, at its core, your business plan helps you to
define what you want out of your business. Writing it down helps you to refine
those goals and make them real.

Communication

Your business plan communicates to readers--who might be customers,

investors or employees--what exactly your business is about. It’s likely you
don’t have time to communicate these things verbally, so the business plan gives
you a forum and a mechanism for communicating what matters to you about
your business

ADVANTAGES OF A BUSINESS PLAN

Every business starts with a business plan because starting a business without a
plan is like going on a chilled winter night without warm clothes and since
starting a business involves money and where there is money one cannot take
chances of going ahead without a plan. In order to understand it better let’s look
at some of the advantages and disadvantages of business plan

1. The first and foremost advantage of business plans is that once

the company has business plan ready then only it can take it forward
and present it to prospective investors who in turn if they like the plan
will finance the business plan and we all know how
important capital is for starting a business because without capital no
business can start.
2. Another benefit of business plans is that it helps the promoter in
getting things right because if plans are in mind only then it can lead
to confusion as mind has dozen of ideas but once the plan in mind is
put into paper in the form of business plan than it gets more clarity
and the owner can concentrate on one plan only rather than thinking
about dozen of plans.

3. Another advantage of the business plans is that it helps in prioritizing

the work and also putting the right people for right job which in turn
increases the possibility of the business plan being a success as the
owner can keep track of milestones of business as envisaged in the
business plan.

DISADVANTAGES OF A BUSINESS PLAN

1. The biggest disadvantage of the business plans is that it involves time

and expenses and as far as small businesses are concerned they neither
have money and expertise to make a proper business plan which in
turn can lead to business suffering more rather than gaining from the
business plan.

2. Another drawback of it is that due to the presence of business plans

the owners may lose flexibility and become rigid also they will keep
sticking to the business plan even if it detrimental to the interests of
the business. So for example, if business plan has envisaged 10000
units of production but due to change in consumer taste sales of only
5000 units can be done and if the owner sticks to the business plan
then it will be a loss making the decision. Hence a good business plan
is one which has the scope of flexibility in it.

3. Another disadvantage of business plans is that though plans are good

to see and hear but execution of those plans has many problems and
uncertainties right from procurement of finance, production related
uncertainty, marketing and selling challenges and many other
 problems and it is next to impossible that plans are carried out in exact
fashion as set out by the top management or the owner of the
company.

As one can see from the above that making a business plans has its own
advantages as well as disadvantages and any person making a business plan
should keep above points in mind as making only a plan does not ensure the
success of the business.

IMPORTACE OF A BUSINESS PLAN

Business plans are important for several reasons, with one of the most prominent
reasons being that they provide a clear outline of action that companies can take
to reach their goals. These plans may give an organization clarity about how
viable their company is and what it needs to grow and prosper. Business plans
help establish specific steps that companies must take to start their business and
promote their success.

Business plans are also important because they:

 Provide insight as to what resources the business needs to reach its goals
 Establish a clear timeline of when a company can expect to achieve goals
 Can help a company determine the steps to take to expand into a new
market
 Offer a straightforward way to track progress as a company grows
 Enable business owners to predict and plan for potential risks
 Allow investors to see the viability of a company