A business plan describes the future of a business in a written form. It can be described as a document which specifies what we plan to do and how do we plan to do it. If we list down the strategy on how we wish to go about a business, it can be termed as the business plan.
A business plan specifies the business goals, the strategy to be implemented to meet the given goals, the challenges which can arise and the ways to handle them, the structure of the organisation complete with job titles and their responsibilities and lastly the capital amount needed to fund the venture and make it run to atleast break even.
A business plan can assist in performing certain tasks for the ones who document them in written form and read them at a regular basis. Business plans are used by budding entrepreneurs generally or by the ones who wish to seek investment.
These entrepreneurs use business plans to portray their vision to potential investors. Business plans are also used by concerns who wish to attract good employees, newer business prospects, to manage their dealing with suppliers and to get a better understanding about how they can manage their companies in a better way.
A well drafted business plan follows the universally accepted guidelines for its content and the form it is presented. The important parts of a business plan are:
The business concept-It deals with specifying the scope of the industry, the business structure, the product or service and how we wish to successfully continue with our business.
The Market- This section deals with the description and analysis of the potential buyers, their profile and how to reach them, how to promote and increase sales. The potential competitors and how to gain an edge over them is also discussed.
The Finances-This section contains the income and cash flow statement, the balance sheet break-even analysis and other vital ratios. To prepare this section we can use a spreadsheet software and also an accountant needs to be hired.
The key components of a business plan-
- Executive summary
- Business description
- Market strategies
- Competitive Analysis
- Design and development plan
- Operations and management plan
- Financial factors
Apart from these sections, a cover page, a title page and the table of contents are also to be added in a business plan.
The length of a business plan depends on its purpose. For a bigger concern, it needs to be very detailed and sometimes it becomes complex also. Depending on the nature of the business, the length of the business plan can vary from a few pages to more than 100 or so.
If a new kind of business is being introduced, the plan needs to be more detailed, to explain it better. The purpose of the business plan is a major factor in determining its length. If an entrepreneur wishes to seek a lot of funds from investors, he needs to explain the business plan in a very comprehensive manner and in case it is used to specify the internal functioning of a concern, the business plan can be clear and concise.
Business Plan: a must for any business
Any person who is about a start a new business and will need valuable resources like time, money, energy and wishes to earn a good return out of the investment, should draft a business plan.
Startups – The budding entrepreneurs who need funds to kickstart a new venture, need to draft a business plan. In fact, businessmen find it helpful at all stages of a business, even when they wish to expand or invest a greater amount.
Businesses already setup but need financial assistance- Such businesses need a business plan to procure funds for growth, just like startups.
Businesses need to regularly update their business plans when:
- The new financial year is about to begin
- Finances are needed
- A new product or service is being introduced
- Management changes
- A milestone is reached
- The old plan seems outdated and impractical
A good business plan can, therefore, do wonders for a business.
Read More: In 2021, Carbon Emissions in the Earth’s crust reached an all-time High.
