Talk of business planning and you may be surprised that some business entrepreneurs may dismiss the term for a jargon only associated with big successful business enterprises. It is as if modern day business entrepreneurs are still haunted by the ancient dogma which states that ‘the world is changing so fast that my plans are immediately out of date, so there is no point of bothering’. The failure by some small and medium scale enterprises (SMEs) to recognize the significance of business plans have often led to catastrophic results of their business due to lack of objective and structured forecasts for their business activities. While many entrepreneurs will prefer employing the services of business plan experts, an understanding of the process is important for setting benchmarks as to what to expect from the experts.
What is a business plan?
A business plan is essentially an operational forecast that systematically outlines your methods of running specific business activities over specified period. Never associate the necessity of business plans to the size of your business because no business enterprise is ever too small to be subjected to planning. Indeed, business planning remains a core component for running both SMEs and large scale business enterprises. Whether seeking to start a new business, to strengthen a successful business, or trying to save an ailing business enterprise, business plans always come in handy in outlining the viability of your prospects to your customers, business partners, and lending institutions.
The Significance of Business Plans
Business planning is ultimately a worthwhile process that demands for both your discreet approach and concerted efforts. This is because business plans immensely contribute to the measurement of progress or success of all your business activities, whether profit making or non-profit making. In addition to demonstrating the current status of your business enterprise, a business plan also outlines the future agenda of your business by clearly identifying the landmarks and the projected direction of the business. In a nutshell, therefore, can use your business plan to evaluate the progress of your business enterprise, assess the impact of your business decisions, pursue opportunities, and fully utilize available resources.
The Key Steps of Writing Business Plans
A business plan presents the most vivid summary of your business activities. Thus, you must always endeavor to present your plans in the most precise and incisive manner to facilitate easy understanding and interpretation of your operational and financial projections. As such, the transitional aspect of your activities from one step to another is very important, regardless as to whether you are using a software template or not. Therefore, you should always ensure that your business plan follows a systematic structure as demonstrated by the following key steps:
• Always begin your business plan with certain preliminaries considered inevitable such as cover page, list of contents, definitions, and contacts.
• An executive summary highlighting the key objectives of the business plan should follow immediately. Use the executive summary to set the tone by providing vivid descriptions of your business.
• Provide an analysis of your target market, your market positioning and competitive advantage.
• Highlight your mission, vision, and business objectives.
• Provide brief explanation of your business strategies.
• Project your plans for product or service development.
• Spell out your financial estimations.
• Identify the prevalent risks and potential opportunities of your business.
• Provide a clear and straight forward conclusion.
Upon observing the above steps, you may finish up by including an annex summarizing other additional information such as your sales forecasts, capital outlays, employee costs, operating costs, cash flow estimated expenses, balance sheet and profit and loss account. The annex section is particularly important for a running business that has been in existence at least for one year or more.
Tips for Writing Successful Business Plans
While drafting a business plan, always remember that the business plan will stand out as the image of your business organization. Given that you will seek to employ your business plan in direct competition with other business entrepreneurs in the search for financial resources and regulatory approvals, you must make your business plan as appealing as possible. The business plan should clearly demonstrate unique characteristics that make your business standout among competitors. You can achieve this by providing clear definitions of your business activities, objectives, strategies, risks, opportunities, working plans, costs, revenues, and financial summaries.
