Starting a business takes courage, but to be successful, you need more than that. You need proper planning. As a business coach, one of the most important topics I cover is creating a business plan. Shockingly, a Harvard Business study found that no more than a third of business owners have a business plan, nor do they want to know why they need it and what they should include in their plan. This is alarming, but not surprising, so I wanted to share the importance of a business plan.
First, let's understand what a business plan is and why you need it for your business. A business plan is a crucial document for anyone starting a new business or already in business. It is also critical for anyone seeking funding from a venture capitalist. In addition, a well-developed business plan can be an essential management tool in your business. It will provide a blueprint for translating your idea into a profitably marketed product or service. In other words, a business plan is about turning your entrepreneurial dream into reality.
A written business plan, regardless of how formal or informal it is, provides the structure for you to consider all relevant business factors, ensuring that nothing significant will slip through the cracks. It requires you to translate your thoughts about how you will run your business and how it will perform into a format dictated by the business you're in and the expectations of your audience. In other words, a business plan is a reality check, and it helps business owners evaluate their idea before fully pursuing it. Additionally, it helps to determine if the return on the business idea is greater than the risks. Lastly, your business plan is your business's résumé, enabling you to plan appropriately and prepare for contingencies. The business plan should prove that the business will generate enough revenue to cover expenses and make satisfactory returns for bankers or investors.
There are eight common elements that should be included in a business plan:
Cover Page – The cover page identifies you and your business and dates the plan. You can also highlight the business logo, slogan, business address, and phone number.
Table of Contents – The table of contents should make it easy for readers to find documents and be one page.
Executive Summary – This is the most critical part of your business plan because it provides a high-level overview and emphasizes the factors leading to business success. Therefore, it should be specific, concise, and well-written because this section is crucial since it's the reader's first impression and can determine if they will delve deeper into the plan.
Business Background – This part of the plan is specific to the business's information and describes the business organization and the product or service it will provide. In this section, you should include the type of business, the type of legal entity, when the business was established, where the business is located, organizational structure, number of employees, type of facilities, and operational information, to name a few.
Marketing Plan – The marketing section of the business plan analyzes the market conditions the business could face, establishes the marketing strategy that the company will follow, and provides details of all scheduled marketing activities that will support the business sales. Hence, the Market evaluation is a crucial analysis of a company's performance. It is a significant task but highly valuable. To conduct this analysis, various areas need to be considered, including sales figures, marketing objectives, advertising content, and the media mix being utilized. The evaluation must focus on the marketing goals. Firstly, the original marketing goals should be examined to determine whether the business is achieving those objectives. It is essential to decide if the current market is the most profitable one for the company. An analysis should be conducted to measure an increase or decrease in the market share and determine by how much. Analyzing the competition can be the most challenging part of creating a business plan. Before studying the competition, they must be identified and investigated. To analyze the competition, it is necessary to determine why customers purchase their products or services and gather information about their products, pricing, and promotions.
Action Plan – The action plan will indicate how operational and management issues, if any, will be addressed and resolved and include contingency planning. This section can also include employee hiring and management, ensuring production takes place as planned, order fulfillment, collections, and dealing with unexpected occurrences or changing conditions.
Financial Projections – The financial projections section of a business plan presents how a business is expected to do financially if the business plan's assumptions are sound. This section will include historical and current projections.
Appendix – This is where you will present your supporting documentation, product marketing materials, statistical analysis, resumes of employees, etc. Employees' resumes are essential in business planning because investors will look at what they have previously done to suggest that they would be successful in the future.
One important thing to keep in mind when writing your business plan is that it should look professional and be a valuable tool for your business. To make it look polished, you can take a few steps like proofreading and editing it thoroughly, using high-quality paper when you print it, but avoiding going overboard with fancy designs, defining any terms and acronyms, choosing an easy-to-read font, and keeping the plan concise and to the point. A well-presented plan can positively reflect on your business and increase your credibility when seeking investors or partners.
A business plan is designed to help you prepare for the future by cultivating your planning habits for the long term. Therefore, creating an annual cycle to keep your plan current and aligned with your business goals is essential. You can make changes to the plan as needed to reflect actual business results, assumptions, and market trends. You can also use the plan to track your actual performance against your projected performance between annual planning sessions.
Starting a new business can be challenging, and many businesses fail due to lack of planning. A well-written and frequently updated business plan can be a crucial tool for success. If you need help creating or refining your business plan, please don't hesitate to contact us at www.diamondgirlzsociety.com. Best of luck to you on your entrepreneurial journey!