How To Create A Good Business Plan.
Having a great idea might not be the door to success, but the door to success is having a good plan. Many businesses fail due to lack of proper planning by the business owner. Research shows that 90% of businesses fail during the first five years.
This is mainly brought by lack of a proper business plan. A business plan is one of the most crucial things one needs to have before starting any business. Having a good business plan is better than having a great business idea. A good business plan helps one to avoid making a lot of mistakes that might end up causing a big loss in the business.
This is a written document that defines and outlines the goals and the objectives of the business that one pertains to start. It outlines the plan of the business from one stage to the other. It describes the business strategy. It tells what to do in a business, when to do it and how to do the business. It shows how you start at a point with certain resources and abilities.
Reasons For Making A Business
Though the primary reason for making a business plan is to ensure the prosperity of the business or the company, there are other technical reasons to make a good business plan. They include:
- For yourself- making a business plan enables you to have a clear strategy to carry out your business with ease of management thus reducing the high risk of getting a loss. This will enable one to a good market analysis, the strategy implementation details and the financial plan
- For the purpose of attracting partners- one is likely to get a business partner or partners if he or she has a good business plan, this will put confidence in the potential business partner for he or she will see it not as a way of loosing his or her finance easily rather a way of becoming rich.
- For the purpose of attracting investors- a good business plan will also put confidence in the potential investors, since they will see the business as way of gaining profit and not getting a loss.
- For the purpose of having a financial plan- a business plan will enable one to have a good strategy to handle his or her business capital and the profit he or she gains.
It clearly outlines and defines the business visions and mission, the set long term and short term goals. It also aims at defining your unique selling proposition and market. It also defines the marketing strategy. For one to write a good business plan he or she has to research on the business thoroughly in order to have a prior knowledge.
Research can be done primarily where by one enquires directly from his or her potential market, it can also be done secondarily through the internet or by reading from the libraries. One can also enquire from the government offices in order to gather a lot and good information.
However, the primary way of research is the most effective for one gets to interact directly with the potential market thus getting to understand what the markets really needs at that moment and their expectations of his or her business.
The Steps In Writing A Good Business Plan.
There are eight important elements that one needs to consider in order to make a good plan. They include: the executive summary, the company summary, the products and services, the market analysis, the strategy and implementation plan, the management, the financial plan and the appendix. The eight elements are discussed below in their correct and precise order as to which they are to appear in the business plan document.
1. The Executive Summary
This might constitute a whole page or more, one should write a very good executive summary for it is at the beginning of the plan and most of the potential investors and business partners will greatly consider this section. It usually constitutes the objectives of the business, the vision of the business and the mission of the business.
This section also constitutes the long term which are to be achieved in like seven to ten years to come, the mid-term goals which are to be achieved in like three to four years and the short term goals of the business which are to be achieved in like twelve months or two years.
The goals and objectives acts as the driving force towards achieving the success of the business. They also shape ones or companies daily activities. Putting down the vision and mission of ones business helps one not to forget due to time. It also enables the staff members to identify with the vision and the mission of the business thus creating and enhancing teamwork among the staff members. Generally this section lays out the general outline of the business plan.
2. The Company Or Business Summary
This might be a one page description. It constitutes the description of the name of the company or the business, the ownership of the company or the business, its location (physical and postal address) , the telephone number and the mobile number. Also the legality of the company or the business.
This helps in directing one to the place of situation the company or the business is. It also enhances the chances or abilities of a business or company to get in touch with the market and the potential investors.
3. Products And Or Services Of The Business
If the company or the business is, meant to produce products, then this section has to give the description of the products. This should be in terms of how and the materials that constitute making it. It should also outline how the products are to be used by the market. It should also outline how the product is to be packaged. This should also outline the validity and probably the lifespan of the products.
If the business or the company is to offer services, then also the description of the services is to be given precisely. This constitutes how the services are to be offered, when and the period it might take per service. It’s also important to note if the services will be carried out by human labour or machinery
This enables the possible market to be knowledgeable about the products or the services. It also enables one to have clear information on the cost of the materials he or she is to buy in order to make the products.
4. The Market Analysis
A business without the market cannot prosper, for the market is what is to bring the profit. Hence one is to do a thorough market analysis. This refers to analyzing the possible buyers of the business’s services and or goods, the possible profit to be gained from the business. One will know if his or her business or company has a good market if the according to his or her initial research, the demand of the service or the product tends to be high than the supply.
The market is to carry the bulk of the expenditure a business has performed. This is a very crucial thing one is to consider in his or her business plan, for this will determine the prosperity or the downfall of the business. It will be futile for one to start a businnness where there is no market, for this will guarantee an absolute loss. Therefore one should consider in his or her plan if the product to be created or the services to be offered have enough market to bring about profit.
Here you also define your unique proposition, this refers to your unique way of selling or what distinguishes his or her products or services from the others. This can be done by offering some extra goods as gifts. One also has to ask him or herself the number of products he or she needs to produce and sell and at what profit margin so as to get your desired revenue. The strategies to promote and advertise your business should also be laid out.
5. The Strategy And Implementation Plan
Strategy in this case refers to how a company or business is to be runned and equipped in relation to the available market. It also refers to the plans laid out in how one is going to increase the investments and how the company or business is to grow and prosper.
Implementation refers to the actual carrying out of the strategies of the strategies laid out. This is to ensure that the good plans are not just left to be like artifacts but to be carried out. In this section one is to outline how, why and when to carry out certain strategies. One should also outline how she or he will distribute his or her products, what it will cost and the way in which the company or the business will improve its services or products. This ensures there is swift in the growing and prosperity of the business which goes in a precise order.
6. The Management
This refers to the staff members of the company or the personnel required in carrying out the business. One should outline the roles of each personnel starting from the manager of the company or the business to the subordinate staff. One should also outline the possible salary that is to be given to each of the personnel providing the labour in the company or the business.
Outlining the roles of each personnel avoids collision within the company or the premises among the personnel that is providing labour. It also brings about teamwork for each member of the business has one mission and vision that is meant to work for the posterity of the business. Planning the possible salary allows one to establish the cost of the labour and thus establish the possible amount of the profit to earn. This ensures than one does not delay in paying the personnel of the business a good salary and in due time.
7. The Financial Plan
This refers to the plan on how to raise the capital, how to increase the investments, how to cater for the cost of the business, the possible profit to be gained and the possibility of getting a loss.
One is also to state the way in which he or she is to cover for the losses in case of occurrence, this can be done by obtaining an insurance policy.
It contains the cash low statements, breaking analysis the profit and any other financial sheet that is to be used.
8. The Appendix
This refers to the supporting documents that are to be attached to the document at the back. They mainly constitute the references of the research carried out, the financial documents that can prove the capability of raising the capital to start the business or the company. These prove the legality of the business or the company.
The description of the legality of the company or the business builds the confidence of the potential business partners, potential investors and the potential market in the company or business products and or services. The description of the ownership of the company or the business shows the openness and validity of the very business or company.
A good business plan is the road to achieving your goals and gaining success. We all know that failing to plan is planning to fail, however it will be equally futile to plan and the fail to take action for it won’t make any difference.
The business plan outlined above guarantees you success in your business if it is followed to the latter. It has been discussed in the order in which it is to be presented, starting with the executive summary, the company or business summary, the products and or the services to be offered by the business, the market and marketing analysis, the strategy and the implementation, the management team, the financial plan and finally the appendix which are the supporting documents attached at the end of the whole business plan. They have been well articulated for anyone to understand.
People have had great ideas but they ended up not achieving them because of lack of the plan and even if they had then it was not a good plan. Businesses too have collapsed within the first five years of onset due to lack of planning. Thus planning is the most essential thing one needs to make before he or she starts a business.
Have a Successfull Business !