As an entrepreneur, planning for your business is inevitable. It’s true that if you fail to plan you’re planning to fail. You don’t need to find yourself among those business-minded people who write a business plan only for investors or banks to read. On the contrary, your plan is a first roadmap for starting and growing a business.
For you to come up with a successful plan, you need to do enough research before putting the concept on paper. A good plan will not only help you identify potential opportunities, weaknesses, and threats but also in decision making for your business.
Rules to follow when formulating a business plan:
Be short and concise
Having a short plan will make it easy to read. A 40-page plan will look huge for anyone going page to page reading. Secondly, it will facilitate a good time to review and update it when necessary. The two reasons explain best how to structure a business plan without complex terms or language.
Understand your audience
Language is a key factor when understanding your audience. It enables anyone reading your plan to understand everything expressed.
For example; if you want to develop complicated scientific research, but your potential investors are not scientists. (I mean they can’t understand terminologies used) Then, you must adapt.
Don’t get intimidated
For sure, many entrepreneurs and business owners do not know how to start and run a business. If you lie in such a category, it’s not a mistake because you will learn from a good source like this. In such cases, it may seem difficult to write your plan, but you should not tremble. So long as you’re passionate about your business, writing and leveraging your plan will be effortless. You need to start with a simple idea then later come up with a detailed one as we shall see here.
Why do you need a business plan?
A plan for any business shows that you have an idea worth to pursue and you deserve to start a company. The whole process requires you and your partners have the real picture of the future look of the company and how it will come to happen. It gives you all the possibilities to have a comprehensive look at the set goals.
Who should write a business plan?
Any individual or a group of people who have a business idea and want to start a company are responsible for structuring a business plan. Remember, a plan not only used for internal purpose but also acts as a promotional document. It’s a document subjected to constant changes and updates.
When should you structure a business plan?
It’s evident that you write a plan before starting a business. It’s the first step in starting and running a business. However, having the best plan ever on earth is worth nothing if you fail to achieve it successfully. Therefore, to get you started, here is detailed information about sections that you must include in your business.
Researching Your Plan
Here you need to know where to market your product/service regarding a prospective audience. You can get information from all sources including first and second-hand information.
Benefits of analyzing your target market
- Analyzing potential market enables you to find your audience, how to approach them hence easier for you to find your voice.
- You have an easy time to identify a gap in what they’re struggling with.
- You will know what products are on demand hence you will build a brand for your audience on what they like most.
- You will be able to locate their meeting places, making it easier for you to reach them.
Estimate your market size
Your target audience will form the market potential of your product; you will be safe when making strategic decisions such as:
- Product development.
- Distribution and Partnering.
- The employee’s analytical skills and company design.
Isolate your target customer
It’s the company, a group of people or the person for whom you solve a specific problem by use of your product or services. No one can thoroughly analyze a particular market; Therefore, there’re several questions you would consider asking when defining the potential market.
- Is my product or service I’m thinking of going to meet the market needs?
- Who are my customers, and where can they be found?
- What competition do I have? And to what level?
- How is my product different from what other competitors have?
- Is my product on the current trend and how long can it win market before it dies?
- Do local laws approve my business for its existence?
- What are the living standards of my target customers? Can they afford to buy my services/product?
- Will I get any profits?
Identify your business needs
When starting a business, it can be impossible for you to build your team, crunch numbers or brainstorm solutions unless your company appears the simplest way possible. The needs of your firm are the problems/factors that may slow down its operation. So, you must find a way to eliminate or stop such pain or suffering for a smooth run.
It is important to note that you can operate other projects with opportunities and not problems. Regardless of whether your project is due to a particular challenge or opportunity, here are the four steps to take when identifying the needs of your business.
- Analyze the problem with an open mind.
- Agree on your assumptions with your stakeholders and write down everything you discover.
- Ask from the people involved to know what the root cause of a problem
i.e. how much money is spent on copying, distribution, storage, and other document handling costs?
The information is useful when building ROI. So, what should you do?
Develop your product samples
These are the specimen of what you want to do or sell. At this point, you also get a chance to market your business profits. It’s crucial if you indicate the prices of your products/services, and even thinking in this direction:
- How much is the cost of production? Versus what is the price of each piece?
- Do you need packaging?
- How will your customers buy the product?
- What is your billing system?
- How will the product reach your clients?
- Do you incur extra cost during your delivery?
If you have a product to sell, sell its benefits, and general ideas and don’t be too technical. direct customers to the addendum by stating; “for more info, visit addendum Page #.”
The location of your company should be an area where your business will have a good environment to grow. You should consider the following factors when choosing a location for your business:
- Accessibility.
- The security nature of the area.
- The competition from other companies who provide the same products/services.
- Understand business Rates including the utility bills, rent, and taxes in the location to make sure they’re affordable.
- The workforce bank in the area; the location should provide a healthy bank of skill base for its success.
Potential growth of your company. This depends on the operations of your company. Do you want moving premises? Are you there for short term or long term terms? These locations vary from business to business, so you have to choose as per your requirements.
Determine your business start-up cost
Startup cost usually involves startup assets and startup expenses. The expenses that you get before launching and start making income with your business are known as startup expenses. Most of those new business expenses include; logo design, legal work, rent, payroll, site selection, brochures, and others.
When we talk of startup assets, we refer to the cash available (in the bank) when starting a company also known as inventory cash. The starting assets are the long-term or current assets like vehicles, office furniture, types of equipment and others.
You should make a comprehensive list of all resources you require to start your business. All the total cost of every assembled item become your startup cost. You should choose reasonable prices while buying your items to avoid over expenditure or overborrowing. Remain conservative and honest while doing your estimates but be optimistic.
Imagine yourself as your own investor
Just imagine the time an investor uses interrupting with founders and drafting out the growth strategies, and by the end, the whole thing falls apart! It’s much disappointing, right? Researches show that 95% of startups are subject to fail not because of the entrepreneurs or product quality but due to market forces. So, these are things that you should know about any investor. They would focus on:
- Customer purchase, and not revenue
- A prove that you run a successful firm despite the challenges
- Flexibility during negotiations, not the recipes
Find potential investors
If you only think of growing your company through professional investors, then know to what extent are those potential backers interested in your sprouting business.
Show them tactfully that your company is on the way to an incredible liquidity event, where anyone who invests his/her money gets a good return. Because many businesses don’t follow that path and many investors choose to use the portfolio approach, where partners share risks.
The above information gives you an in-depth direction to get started. In fact, you must be thinking where to start right away. But you aren’t alone, here comes the most critical section.
How to structure your business plan
Executive summary
In the summery, you succinctly present your vision. You should try to make your summary answer the following questions:
- What is the sector of your interest?
- What services/products do you offer?
- Who are your target audiences?
- Do you have a picture of your future industry?
- How scalable is your company?
- What next steps do you have for your company?
- Who are the founders of your company?
- What is their background and experience in business or that sector?
- What is your motivation in starting such a firm? Why now?
Mission statement
This part is essential mostly to you and your team. Here you merely state the company objectives and goals. It’s like selling benefits and features of your company.
Market strategy
A good market strategy is vital; it specifies the need for carrying out a market education. You should and must give way on how product promotion will be carried out. Think off a company that has intensive advertisements and product education. It is on the verge of making supernormal profits.
Defining the goal and purpose of a market plan is vital and must form the pivotal role of the business. Lack of adequate knowledge of your market penetration strategy can cause havoc. Imagine having a plan that can reach many people. In business its all about customers and maximizing the potential at a certain time. You should aim to put all the prospectus customers explaining in detail. Its likely to change the mass to your side. If the primary goal is to achieve profit ensure that market plan is well written and conclusive.
You should explain your business’s competitive advantage. Sets out ways in which you’re going to deal with market competition. The most important thing here is to headhunt men and women of integrity and ready for workers with zeal and passion for forming the workforce. Remember your company is not the first one. Your goal should not only beat your competitors but also set a bar high than them. Come up with methods like the use of media in promoting the product. Then, be in a position to explain how the choice of the model will help to achieve or reach a targeted market. Effective media advertisements usually motivate consumers.
Management Tools
Most companies fail due to lack of a proper plan on how they should operate. You should put a functional structure of a company with a hierarchy from the topmost director to the very least individual specifying the roles and duties to perform. This will ensure the smooth running of the organization, and there will be no crushing of interest. When drafting a business plan, it is equally of advice to include all the aspects of the law. The laws are explaining the sharing of profits if the organization is going to be a partnership. Most plans are shaped on this aspect.
Production plan and sales
After selling an idea to investors the next big, this is to determine how to implement the concept. This bit explains and describes the manufacturing, research, and development, instruments for the operations of the business. Therefore a plan to roll out a strategy to when such machinery needs to be implemented. Here you should see an emphasis on how major business functionality may run more effectively than those of his competitors. The sales plan brings harmony with the marketing strategy the business in general and weighs on the ye company’s strength and weakness. A lot needs to be included in the plan to achieve all these.
Financial data
At the center of any business operations, accounting is critical. It’s advised to hire a competent public accountant at the start of the business. If the primary objective of the enterprise is to make a profit, then the investors would require a capital forecast. You will be required to project the proposed starting capital, its good to be precise. Banks and investors would be critical about the figures, and no mistakes should be made about this. Any miscalculated amount makes investors shun the idea.
Many enterprises stumble and fail due inefficiencies. Ensure that the balance sheets, income statements, the break-even analysis are all up to date. The last part is to put all these on paper and let it sell out. Like a project and a resume make a detailed and attractive executive summary.
Make it Binding
The long journey is ended. Let it be the door to the many opportunities you wanted. Make the book enjoyable for the investors and any external people who would wish to read it. Segment the strategies in an executive summary highlighting the most important areas and giving them the necessary attention.
Sacrifice in the short-term, for Long-Term Gains
To be able to fill a business plan you must make a great sacrifice. In this, you should leave all the pleasantries of life and dedicate the entire duration of documenting a plan relevant to your business. Looking at the nature of the business, you should not have a hard time creating something that is likely to change your ideas to reality. Once said and done it lies on the prospect of the investors to guide the work of an entrepreneur.