Business planning is a crucial part of every business whether it is a start-up or an existing business.
The entrepreneur needs a business plan to adequately organize and manage the business. Any business that is run without sticking to particular guidelines precipitates an imminent failure. Failure to manage the business prudently will result in a myriad of handicaps that will cripple the business.
Some of the aspects of business planning that are critical with regard to the day-to-day running of the venture include service or product delivery, financial management, and marketing. The best way that an entrepreneur can put grips on these main concerns is by having a blueprint from which to refer. This comes in the form of a business plan.
A business plan can be referred to as the charter that details all the components of a certain business. The document is a written guideline that summarizes all the inherent particulars of the business. Writing a business plan is usually a requirement from lending financial institutions but the use of the document should not end there; the entrepreneur should adhere to the guidelines. Then again it makes perfect business planning sense to make alterations to the blueprint in case a change of tactic here and there is found necessary.
In writing a business plan one should start with the COMPANY/FIRM DESCRIPTION. This chapter should start with you stating the firm's mission and vision statements. Next, briefly detail the business concept by describing the product/service, the main customers, the benefits they stand to acquire, how you will distribute the product/service, and environmental impact if any. Finally highlight the management team and state the business location.
The second chapter should detail the PRODUCT/SERVICE DEVELOPMENT. Explain the various steps that will be followed in its production and providing a timeline for the same. Next, indicate the need for the product/service and the reasons why you feel that the need exists. Explain what your competitive advantages and methods of product/service differentiation i.e. uniqueness are. Finally briefly explain the factors that may hinder you from penetrating the market.
Chapter three has to do with INDUSTRY ANALYSIS. Here you should explain and describe the industry in which the business lies. Explain what the characteristics of the industry are in terms of size, maturity, competition, entry and growth barriers, financial position and performance, and technology and innovation. Give insights as to how government regulation and economic changes affect the industry. The internet will prove a valuable resource for this chapter.
Moving on to the fourth chapter i.e. the MARKET ANALYSIS, you are required to make mention of some issues pertaining to your prospective clients including the demographics, geographic distribution, purchasing patterns, lifestyles and behavior. Also describe your market niche and indicate how you intend to price your product/service.
Chapter five has to do with your COMPETITION. Here you explain who they are and their location, their characteristics and market share distribution. Discuss what barriers there are to market entry and the strategic opportunities that can be harnessed.
Next we have the MANAGEMENT AND ORGANIZATION chapter where you start by detailing issues pertaining to your proposed firm's management team. Provide details about the team's educational background and work experience. Next, describe the firm's management philosophy and working culture. Describe the legal structure of the company and then the various job descriptions. Inserting an organizational chart here will help clarify the management structure and workforce hierarchy.
The seventh chapter in writing a business plan is about the MARKETING STRATEGY. Indicate details about the pricing structure, and how the promotion and placement of the firm's products/services will be done.
Next is the OPERATIONS AND PLANNING chapter where you provide the technical details about product/service production starting from the raw materials to the final product. Highlight issues of labor, productivity, capacity and quality control.
The ninth chapter is the FINANCIAL ANALYSIS where you provide financial statements concerning the start-up costs, projected profit and loss statements, projected cash flow statements and the projected balance sheets. Provide three-year projections in this section. You can then add a chapter on your EXPANSION PLANS.
Have an APPENDIX section where you will include aspects like SWOT analysis, Porter's Five Forces, and any other information e.g. schematics and diagrams of proposed products etc. The final chapter in writing a business plan is the EXECUTIVE SUMMARY and it appears first on the document. As the name suggests it is a one-page summary of the entire business plan. Make it as attractive as possible since most readers will use this to welcome or dismiss the idea. Entice them so that they can get into the business planning details therein.
The business plan is now complete. Print it out and bind it attractively (of course in business style). Make a copy for yourself so that you can always refer to various aspects as time goes by.