How to make a business plan? : The best way to make a business plan is mentioned here. In simple terms, Business is defined as an economic activity that involves the sale/purchase of goods and services (on a regular basis) with the objective of making profits and satisfying human wants. A business organisation aims at making the optimum use of scarce resources of the economy, which primarily includes land, labour, capital and machinery.
Objectives of a business
Major objectives of a business entity can be classified into 2 broad categories:
1. Social Objectives
Producing and supplying quality goods and services to consumers, avoiding unfair trade practices, welfare of the employees of the organization as well as generation of employment are a few examples of social objectives.
2. Economic Objectives
On the other hand, profit earning, survival and growth are the key economic objectives.
In order to fulfill both social and economic objectives, a business entity needs what is known as a Business Plan.
What is a business plan?
Now, what exactly is a business plan? The answer is here. A Business Plan basically is a written document that serves as a roadmap for your business venture. This document highlights the essential basics about your business, products and services as well as target market. It also provides information regarding the goals that you have set for your business and how you plan to achieve those goals.
Apart from a business plan, you must also have a marketing plan and a financial plan. Depending upon the scale of business (small scale/large scale), you must explore your financing options like small business loans, angel investors, crowdfunding or borrowing from friends and family. You must plan your finances keeping in mind the entire cost of starting up the business (for example, take care of market research costs, licences and permits cost, branding and promotion, having the necessary stock of inventory, payment of legal fees and taking care of the grand opening events as well) and meeting the initial operating cost needs (like transportation, rent, salaries and wages of employees, travel and transportation costs and so on).
In other words, your business plan describes the nature of business, sales and marketing strategy, financial background and future projections regarding the profit and loss of the entity.
Types of business plans
Let us now understand what are the different types of Business Plans. This will help you know which one is the perfect for you. Mentioned below are the various types of Business Plans:
1. Startup Business Plans
This type of business plan is suitable for new businesses that are about to enter the market. This document outlines information regarding the company and the product/service that it entails to supply. It also contains details regarding market evaluations and your projected management team.
2. Internal Business Plans
This document provides information about the operational costs and profitability of the company as well as various other internal plans concerning project marketing, hiring and tech costs.
3. Strategic Business Plans
A strategic business plan must include 5 essential elements: Business Vision, Mission Statement, Definition of Critical Success factors, Strategies for achieving of Objectives and Goals of the organisation and an Implementation Schedule.
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4. Feasibility Business Plans
This type of business plan provides details about the feasibility of the proposed business venture i.e., target market for the company’s product and how to ensure profitability of the business.
5. Operations Business Plans
Main aim of an operations business plan is to detail the employee’s responsibilities for the upcoming financial year.
6. Growth Business Plans
Proposed investment avenues, details about the company’s current scenario (i.e. its management and officers), any capital infusion required etc. are all a part of Growth Business Plan.
This discussion brings us to the importance of planning and how proper plans are crucial to bridge the gap between where we are today and where we want to go. Effective planning contributes to the achievement of pre-determined organizational goals and objectives. It ensures that nothing is going haywire.
The business plan acts as a guide for deciding what action should be taken and in which direction. In other words, it facilitates quick decision making. A well defined plan reduces the risk of uncertainty and helps reduce overlapping and wasteful activities as well.
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How to make a business plan?
Now it is time to move forward and discuss about 5 steps involved in formulating a business plan. So, to understand “How to make a business plan?” read the points mentioned below:
1. Research Well
It is very important to spend a considerable amount of time in researching about the product/service your company plans to offer, who will be the target audience, how you plan to fight the competition and survive in the market. All these things must be given some thought before you create a business plan. In other words, knowing everything about your business and the industry you are entering provides you an edge over your fellow competitors.
2. Determine the purpose of your plan
It is crucial to note that the purpose of your plan must be effective in order to attract potential investors. A business plan clearly defines the objectives of your business. Try to keep it clear, crisp, attractive and concise.
3. Create a Company Profile
Company Profile is an integral component of the business plan. The ‘About Page’ of official business website gives the information about the company. It plays a crucial role in attracting customers and bagging big contracts.
Your company profile provides vital information regarding the history of the organisation, products/services offered by the company, what is your target audience and what makes your business unique. Make sure you cover all these points.
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4. Include key elements of a Business Plan
An effective business plan must include the following:
1. Executive Summary
It provides an overview of the company’s profile and its goals/objectives in the future. This is a vital element of the business plan because it tells the potential investors why they should invest money in your company.
2. Market Analysis
Next step involves identifying the Strenghts, Weaknesses, Opportunities and Threats to your business enterprise (SWOT Analysis).Who are your closest competitors? What strategies will you adopt to beat the competition? are a few questions that have to be answered before you proceed further with your business plan.
3. Company Information
This section describes how your company plans on meeting customer needs and satisfying their wants. Resume of each member of management are included in an appendix that provides useful information like past experience, any previous record of achievements, industry recognition or community involvement, time period for which they have been a part of your company and the salary. Also, names of the members of the Board of Directors and their contribution to the company’s success are discussed in this step.
4. Marketing and Sales
In this section, you need to discuss the marketing strategy you will adopt to boost company’s sales revenue.
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5. Product Description
All the essential details regarding your product and what makes it unique are to be discussed here.
It is important to provide details about company’s financial data, present financial statements (which involve Balance Sheet, Cash Flow Statement and Profit and Loss Statement) that will help potential stakeholders in tracking past record.
5. Show utmost Dedication
Your Business Plan must explain why you care! It should be representative of your passion, enthusiasm and devotion towards achieving excellence for your company. Your attitude matters a lot in ensuring that you stay at the top of the game.
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I hope you find this article resourceful and now you have got understood that “How to make a good business plan?”. Thank you for giving it a read.
Author: Manasvi Nagpal