Why it's Important to have a Business Plan?

Writing a Successful Business Plan is essential in today’s business environment and it will be central to how you start, grow and develop your business.

What's a Business Plan?

A Business Plan is a written document that describes a business, its strategies, objectives, market segment and its financial forecasts. Often described as a roadmap to success, a business plan has many important uses from demonstrating the viability of a business, measuring success, identifying weaknesses and secure funding from angel investors, banks or government bodies.

It should be continuously updated as the business evolves.

Why it's important to have a Business Plan?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Here are 4 reasons why you need a business plan:

1. It will help you steer your business as you start and grow.

Think of a business plan as a GPS to get your business going. A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan like a GPS for how to structure, run, and grow your new business. It’s a way to think through and detail all the key elements of how your business will run.?

2. It’s not as hard as you think.

A business plan is a written tool about your business that projects 3-5 years ahead and outlines the path your business intends to take to make money and grow revenue. Think of it as a living project for your business, and not as a one-time document. Break it down into mini-plans – one for sales and marketing, one for pricing, one for operations, and so on.

3. It will help you to reach business milestones.

A well-thought-out business plan helps you to step back and think objectively about the key elements of your business and informs your decision making as you move forward. It is essential whether you need to secure a business loan or not. Keep in mind that the plan does not have to have all the answers.

4. It can help you get funding.

Business plans can help you get funding or bring on new business partners. Having one in place will help investors feel confident that they will see a return on their investment. Your business plan is the tool you will use to persuade others that working with you (or investing in your business) is a smart decision.

What headings should be in a business plan?

There is no right or wrong way to write a business plan. You can pick a plan format that works best for you. What’s important is that your business plan meets your needs.

Below you will find the key elements to be included in a business plan.

Executive Summary

• Introduction: Introduce your organisation and the reasons for the business plan
• Mission statement: Your overall, long-term vision summing up your values and standards (no more than 20 words)
• Legal structure: Charity, company constituted group etc.
• Summary: Write this at the end of the business planning process. Maximum of three sentences each on needs, beneficiaries, services, levels/ standards, resources. The present situation and the future plans.

Your Organisation

When you are writing a business description you should be as detailed as possible and cover the four main headings; People, Product, Objective and SWOT Analysis.

• People –?This includes listing the shareholders, sponsors and a breakdown of the management structure. Any financial or legal advisors should also be included in the description.
• Product –?When describing your product/service, clearly explain what it is and what exactly it does. It is important to cover all the main points such as the background to its development, the unique selling point, benefits and features and future developments.
• Objective –?This is basically a projection of where you see your business going over the next 5 years. You should state specific milestones to be achieved by your business and include sales forecasts, employment and product development.
• SWOT Analysis –?A SWOT Analysis is an extremely useful technique for identifying and analysing the internal and external factors that can have an impact on a product/service. This technique assists you with analysing the strengths and weaknesses of your product/service, the opportunities that exist and the threats to the viability of the product/service.

Market Analysis

This section should cover market research and competitor analysis.?You must demonstrate that you have carried out market research to justify the projections made in your business description and it must prove that there is a viable market for your product/service. There are four main headings to cover in this section:

• Target Market-?This is the market segment to which you are planning to sell product/ Service.
• Market Trends –?Is the market growing or declining? You will need to show any recent changes in the market, future predictions and your plans to meet future demands.
• Profile of Competitors –?What are the competing products/services? List the key players in your market and include their turnover, profits and market share.
• Competitive Advantage –?This is the reason(s) why potential customers will choose your product/service rather than your competitors.

Marketing and Sales Strategy

This section should detail your strategies for reaching your target market and developing their interest in your product/service. You should also include a sales strategy to demonstrate how you will sell your product/service to your target market.

• Marketing Strategy –?This heading should answer questions such as, Who will do the marketing? What strategies will be used to reach the target market? How will they position the product/ service in the market and differentiate it from its competitors?
• Pricing Strategy – What price will attract the customers you target? What price will make you the best profit?
• Sales Strategy –?Describe how you will sell your product/ service to the target market. Include whether or not it will be directly, through a distributor, through a website or other channels. Analyse the cost involved for each sales method and both the advantages and disadvantages of each method.
• Communications Strategy –?Describe the methods you will use to promote your product/ service in the marketplace. Detail your advertising plans, both online and offline as well as any exhibitions or conferences you intend to promote at.

Operational Infrastructure

In this section you set out details of the equipment and facilities you will use to create your products and serve your customers. Depending on the nature of your business, these will include all or some of:

• Premises – offices, workshops and storage facilities.
• Equipment and machinery.
• IT resources – Software and hardware, including accounting systems.

You should also include details of major suppliers on which you will rely for outsourced services as well as for key raw materials, and the nature of agreements you would make with them.

Management Team Summary

This is where you will outline the intended structure of the company in terms of management, number of employees, etc. There are three main headings to cover in this section:

• Management Organisation Chart
• Staffing
• Training Plans

Financial Information

You financials will tell you whether or not what you intend to do will eventually be profitable. After all, there's not a lot of point to being in business if you can't make money. Make sure you cover:

• Start-up Funds – Do you have enough capital to carry you through until you start achieving a positive cash flow?
• Operating Budget – Where will you spend your money during the first year?
• Financial Assumptions – What are you basing your projected numbers on?
• Cashflow Projection – Based on your educated assumptions, what income and expenses do you project? How long will it take to achieve a positive cashflow and when will you break even?

Funding Requirements

This is where you need to clearly state the total funding requirements of the business. You should describe how you intend to get funding and include a detailed breakdown of how these funds will be spent. You should include:

Appendices

The appendices of your business plan should hold the relevant documents to support the information given within the main text of the plan. Included documents in the appendices vary from business to business, but usually include a selection of the following:

• Curriculum Vitae’s
• Financial Assumptions
• Receipts
• Testimonials
• Terms sheet for potential investors
• Digital Footprint (website, social media, etc.)

If you want to learn more about putting your business plan together or hands-on support on updating your existing one, contact us at [email protected]

Sources:

https://www.waveapps.com/blog/importance-of-a-business-plan

https://www.companyformations.ie/blog/7-essential-steps-to-writing-a-successful-business-plan/

https://www.mindtools.com/aynpexk/practical-business-planning