A business plan is a document with details on how to develop a business, its stakeholders, and how the finances of the company will be managed. Once you have a business idea, the next step should be how to draft a business plan. There are many sources of business ideas such the internet, brainstorming, hobbies and interests, customer surveys, mass media and trade exhibitions. This article will help you to write a good business plan.
Principles of a Good Business Plan
There are two main principles that you need to keep in mind when drafting your business plan. These are:
- Keep it short. Your business plan will be read by busy professionals like investors, loan officers, etc. Moreover, you need to be able to regularly and easily review and refine it.
- Know your audience. This will help you to create a document in a language that will be well understood by your target audience.
What to Include in a Business Plan
A good business plan should have the following sections.
This section generally highlights details about the business you want to start. It should be well written, short and precise. This section is important, and it is used by investors and lenders to make decisions about your business.
The section describes what the business is about, what the company is selling, business goals. Make sure to list the following items in this section.
- Business name and location of the head office
- Products you wish to sell
- Mission and vision statements
- The main objective of your business
This section describes your business, what it is, how it will operate and its goals. A good business overview should contain the following items.
- The structure of your business, whether it is a corporation or a sole proprietorship
- Services and products that your company offers, its customers and suppliers
- The means of doing business
- The formation history of your business
- Short term and long terms goals of your business
- Financial and market growth of your business
Products and Services
This section describes what products and services your business is dealing with and the benefits to customers. Give details about the suppliers, the price of products and the revenue expected to be generated from the business.
- Products and services your business is offering and their benefits to customers
- The role of the products you are offering in the market
- The life cycle and development of the products you are selling
- Any information related to copyrights or patent
Market Analysis provides an overview of the market you are selling your products. It should include charts and graphs where appropriate. It will be best if you do a thorough market research to get findings and conclusions. The market analysis should provide.
- A description of the industry
- An estimate of potential customers for your business
- Marketing data for your business products and services
- Strengths and weaknesses of your business in relation to your competitors
Sales and Marketing
You need to develop sales and marketing information. Outline the following in your business plan in this section.
- Details on how you will promote your business
- Estimated costs for promotions and advertising
- How to conduct the business promotion and the number of employees needed
Business Management Organization
This section outlines the organization of the business; it owners, management and the board of directors. It also details the departments and the role of each.
- Have an organization chart providing details of the roles of each department
- Details about the owners, their names, number of shares in the company, their skills and biographies
- List of directors and other specialists such as accountants and lawyers
- Details of all the management team, their names, positions and responsibilities
The financial plan provides an estimate of the finances you need to start and run your business. If you don’t have a financial background, make sure you get a professional help from an accountant. This is because you need to have a balance sheet that reflects the true financial position of your proposed business. Include the following in your financial plan.
- Trend analysis for your business’ financial statements
- Recurrent business expenses such s salaries, advertisements costs and insurance costs
- The amount needed in the next two or three years to run the business
You need to provide estimates of income the business will generate for the next two or three years. This section also needs a professional to design a profit and loss account, balance sheet and cash flow forecasts. Ensure to include financial projections such as income forecast for the first two years of operation.
This is usually the last section in a business plan. It is where you can include resumes of your core team as well as any necessary documents such as permits, media coverage, charts and graphs, rental agreements, etc.
A business plan is important to a business in that it assists one to see a business’ feasibility before starting and running one. It also helps to identify errors in business ideas through financial projections. Since business markets are dynamic, and they face changes from time to time, a business plan helps the executive to restructure a business and also to foresee unforeseen circumstances. Also, it helps a business to use the available finances and allocate the necessary resources.