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• 20-09-2023

Planning to start a Business…

Key Elements of an Effective Business Plan 

Importance of Business Planning is often understated and more so because of one question that most entrepreneurs don’t get right – ‘What is a Business Plan?’. While it is fairly easy to answer it theoretically, a business plan is a lot more than just a write-up which tells about the business’s goals when you get into the practical aspect of running a company.

A business plan is a written document of your Business’s future. A sound plan contains information needed for effective operation and management of the company. It explains what is possible for the business, how it will be done and why it will be successful. 

5 good reasons to write a business plan when starting a new business

1. To Test the Feasibility of Your Business Idea: Business plan can act as a safety net and is the best way—other than going out and doing it—to test whether an idea for starting a business is feasible.  It can save a great deal of time and money.

2. Roadmap for the business: While putting together a business plan, entrepreneurs ask themselves a lot of hard questions and come up with well-researched and insightful answers. And the practice of writing it helps to articulate the vision in realistic terms and better determine if there are any gaps in strategy.  

3. Deciding whether new assets are needed: Spending resources on capital improvements like new facility, and new assets is never an easy decision for budget-conscious small business owners. But a business plan can bring clarity whether to buy or lease and help determine the optimal amount allocated to those assets. 

4. Seeking investment for the business: While seeking funding, whether it is a loan from a bank or capital from investors, a business plan can answer questions about profitability and revenue generation that helps make a decision if someone decides to invest – or how much they might choose to invest.

5. To Set Business goals to achieve: The broad operational and financial objectives of business and the small details, like budgeting, market planning need to be paid attention to. Advance business planning will ensure fewer unforeseen problems as the business gets up and running.

But, how do you write a business plan?

It is important to craft Business Plan in a manner that makes it successful and stand out. Here are the key elements and some tips on writing a sound Business plan:

7 key elements that should be included in every business plan

1. Executive Summary: Begin the document with a synopsis but make sure the executive summary is written last. The one-pager should include vision & mission statement, company history, a brief description of products or services, highlights of growth so far, and a summary of business growth plan.

2. Company Description: Elaborate on what product or service you offer, who you serve, why you’re different than the competitors. Describe how the business satisfies a need in the marketplace. Think of this section as an extended elevator pitch that will help readers understand the what and why of your business. 

3. Market Analysis: Deep dive into the industry to identify target market (size, demographics, historical and forecasted growth rates, purchasing trends, etc.). Determine what share of market can the business capture.

4. Competitive Analysis: Assess competitive landscape, get answers to these questions and use them to formulate a strategy to stand out from the crowd.

• What are your competitors’ strengths and weaknesses? 
• What results are they trying to achieve? How do they market their businesses? 
• What are the barriers to overcome and opportunities to compete with an advantage? 

5. Your Organization structure & processes: Lay out how the company would operate including detailed profiles of management team and workforce skills and capabilities required. Even in very small businesses and sole proprietorships, it helps if a profile description & background information for key players is provided. 

6. Marketing and Sales Plan: Explain how to find and create customers by defining marketing and sales strategies. For marketing, discuss communications strategy, platform & target audience. For sales, focus on who will handle sales and what tactics will be used to identify, attract and convert leads. Include projections of 2-3 years based on market analysis to give more weight to your plan. 

7. Financial Summary: This is critical if you’re seeking funding and must be as current, accurate, and detailed as possible. To provide information about the company’s financial health and future, include income statements, cash flow reports, and balance sheets that outline assets and liabilities. 

Your business plan is the essential foundation of your business. Learning how to write it in a practical, efficient and compelling manner will assist you in managing each aspect of your operations resulting in reliable and continual growth, creating rules, guidelines, distinct protocols of business activity; internal and external environmental factors; owner, management, employee duties and responsibilities and so much more.

‘If you fail to plan in advance, you are planning to fail’ 

– Benjamin Franklin

#Startup #NewBusiness #BusinessPlan #ScaleUp