Techniques For Writing a Business Plan

A business plan may be defined as the formal statement of a collective set of business goals or planning. It can also contain the background information about the organization. Business plan is mandatory to run a company because it is an essential part of initial strategic planning of any company. The capability of writing this plan effectively is a fundamental quality that a businessman should have, especially while starting a new business company or organization. The plan acts like a road map which may guide the company towards success.

There are some objectives or reasons to write a plan for business. These are mentioned below:

– It’s a tool or equipment for obtaining financing
– This helps to unite joint venture partners in a common goal or destination
– It makes the whole business goals feasible to study and analyze
– It will serve as the blueprint for the debut business companies.

A business plan works to convince individual or institutions for investing money in his business or loaning money. Sometime the plan writing is more important than the plan itself. While attempting to write a plan, the businessman’s strategic foundation should be identified first. This strategic foundation explains about the type of business he wants to start or which type of firm he wants to establish. It also indicates the basic elements that are needed to start the business firm. One can predict about the future condition of the company by the plan on his business. In the plan, the main products and the information on the clients should be written down in detail. To get more idea about it the business man can contact with business marketing consultants who can help him.

The planner can be able to declare the financial conditions and financial goals of the company by the help of written form of the business plan. A businessman must think about the present and the future conditions, which mean that he must analyze recent conditions as well as the upcoming needs. He should categorize the ideal and awful clients so that he can take steps to attract the best clients, at the same time to refuse the others. A business plan should be written in brief way so that he won’t forget any topic or information.

Writing a business plan proves the deadly seriousness of a businessman. It is very important in acting as a guide in different stages of the business. While writing a business plan one should follow some criteria which make the plan more effective and work worthy. To set up a unique business goal that is verifiable. The main purpose of writing the plan is to notify the specific goals or plan that a company is going to perform. It will guide the businessman to take decision himself as well as it will explain his plans on business and aims to anyone reading his plan. It also states the long term objectives of the business.

The plan must be realistic in every aspect. It includes the time line, market analysis, specifies projected expenses and revenues, and creates an accurate forecasting. One must keep his plan simple, easy and clear to be understood easily. If the language is difficult and inflate for impressing the customers, it may affect in reverse way. It may be confusing for the businessman himself. It should be very easy and naturally described without any excess verbiage. It should be in proper tone so that the reader can response and react positively to that tone. One must consult with some of the institute concerned with the business sector. These firms and organizations help you to take proper decision at the right time. Consulting institutes such as business consulting firms, business technology consulting, business plan consultants, organizational consultants etc. They help and give you the proper guideline in every aspect and decision. These types of firms summarize the plan and efforts that is effective for the company.

One must write a plan staying along the lines of traditional business plan format. Creative thinking is always appreciable, but to make yourself look more professional you must go with the guide of a tested business plan template. This may organize the plan into a well structured data and document.

One must clearly state and define the main purpose of the business plan. Similar to the identification of the goals of business, the writer must identify and specify the goals of the written business plan. It will help to secure the financial backing from the investors.

Once the plan is ready for the inauguration of the business, the businessman should decide his priority. These priorities will make the success in business easier. The main contents of writing a business plan are given below:

Cover sheet
Statement of purpose
Table of content
The business
-Description of business
-Marketing
-Competition
-Operating procedure
-Business insurance
Financial data

Summary:
Overall a business plan should be written in such a manner that it is easily understandable and that have the ability to attract newer clients. After these mentioned process been finished, one would be ready to face challenges that a new business would bring.

Writing Your Business Plan (Traditional or Online Business)

How To Write A Business Plan

In my previous article, I talked about how you can plan your business startup. I defined a business plan as a written description of the future of your business. This is a document that indicates what you intend to do and how you intend to do it. I further explained that if all you have is a paragraph on the back of an envelope describing your business strategy, you have written a plan, or at least the beginning of a plan. I also said that a business plan consists of a narrative and several financial worksheets.

I mentioned that the ‘writing of a business plan’ as one of the pivotal steps involved in setting up a successful business. By now you should understand the need for writing a business plan. Writing a business plan, for a traditional brick and mortar business, will probably take a lot of time. It may take up to 100 hours or even more. For obvious reasons, a new business needs to carry out a lot of research before a business plan can even be developed.

For an online business, a detailed and in depth business plan is usually not necessary unless you are trying to combine your online business with a traditional business. For most online business startups, the detail involved with planning a traditional business is not required. However, it would still be beneficial to you if most of the topics were still covered, even if only briefly. Having a written plan in front of you will help you to focus on important aspects of the business.

You may not have thought much about your competition or outsourcing some of your work, but things like that will impact your ability to make a profit. And you will find this especially so in the beginning phases of your business. Even you are just opening a lemonade stand in the front yard, you will still need to know what Susie is selling her lemonade for on the next street over!

So, although a detailed business plan may not be required for an online business, I am going to include it here so you can at least look at and consider each section and determine yourself if it applies to your business.

Here I shall be discussing the basic steps involved in writing a business plan:

1. Executive Summary: The first step involved in writing a business plan is the executive summary. Here, include everything that you would cover in a five minute interview.

Explain the fundamentals of the proposed business: What will your product be? Who will your customers be? Who are the owners? What do you think the future holds for your business and your industry?

Make it enthusiastic, professional, complete, and concise.

If you are applying for a loan, state clearly how much you need and be precise in how you are going to use it. Also include detail about how the money will make your business more profitable, thereby ensuring repayment of the loan.

2. Business Description: After the executive summary, you need to write a short description of the business you are going into. You need to give a general description of the industry your business belongs to. You will write about your company’s mission statement, goals and objectives, business philosophy, as well as its legal form of ownership (sole proprietor, corporation, LLC, etc.).

Describe your most important company strengths and core competencies. What factors will make the company succeed? What do you think your major competitive strengths will be? What background, experience, skills, and strengths do you personally bring to this new venture?

3. Marketing Analysis/Strategy: The next thing to write (after the general description) should be your marketing strategy. For new or existing businesses, market analysis is an important basis for the marketing plan and will help justify the sales forecast. Existing businesses will rely heavily on past performance as an indicator of the future. New businesses have a greater challenge – they will rely more on market research using libraries, trade associations, government statistics, surveys, competitor observations, etc. In all cases, make sure your market analysis is relevant to establishing the viability of your new business and the reasonableness of the sales forecast.

4. Location: Writing down the location of your business is very important. Locations with greater customer traffic usually cost more to buy or rent, but they require less spending for advertising to attract customers. This is especially true of retail businesses where traffic count and accessibility are critical.

If an online business, you need to go into detail how you will attract customers to your website. General statements like “I will use Face Book ads and email marketing” will contribute almost nothing to helping your cause unless you have detailed statistical analysis of tests you have conducted or of another similar business you have been associated with. If you do not have any data upon which you reference your estimates, it could show lack of proper thought to the remainder of your business plan.

5. Competitive Analysis: Business by nature is competitive, and few businesses are completely new. If there are no competitors, be careful; there may be no market for your products. Expand your concept of competition. If you plan to open the first roller skating rink in town, your competition will include movie theaters, malls, bowling alleys, etc.

6. Management and Operations: Because management problems are the leading cause of business failures, it is important to discuss management qualifications and structure. Resumes of the Principals should be included in supporting data. If your business will have few employees and rely heavily on outside professionals, list these key people and their qualifications. If you are seeking financing, include personal financial statements for all of the principals in the supporting data section.

7. Personnel: The success of any company depends on their ability to recruit, train and retain quality employees. The amount of emphasis in your plan for this section will depend on the number and type of employees required.

8. Projected Financial Statements: These statements are usually helpful, but not necessary. You will develop and describe your strategies for the business throughout your Business Plan. In the financial section, you will need to estimate the financial impact of those strategies by developing projected Income Statements, Balance Sheets, and Cash Flow Statements.

It is usually recommended that these projected statements be on a monthly basis for at least the first twelve months or until the business is projected to be profitable and stable. Activity displayed beyond the monthly detail may be in summary form (such as quarterly or annually). The forecast period for most business plans is two to four years.

9. Summary Section: This section is where you will be able to attach or explain any detail not applicable to the previous sections. This section should be used to provide the financial statements of the Principle’s involved in the business and any other data you think an investor would be interested in seeing.

The main thing to remember in this section is not to provide new data, but to explain in detail data that has already been provided and to provide the support for that data.

When you sit down to compile all of the elements of your business plan, make sure you have each section able to stand on its own merits. This means you should not reference other sections sending the reader (your potential investor) back and forth between sections.

Do not try to write your business plan in one sitting. As I mentioned in the beginning, for a traditional brick and mortar business, it could take in excess of 100 hours to compile all of the information needed into a comprehensive but yet understandable document. For online businesses, probably not that long. But your final product should be well thought out, well documented and easily understandable.

Business Plans Are a Team Effort – Think Outside The Box

Business plans are mostly about organizing, formalizing, and committing to a specific plan-of-actions. Such a document generally presents the objectives, strategies, analysis, and a detailed roadmap for implementation. Underlying a plan-of-action is comprehensive analysis of historic, current and proposed results all supported with assumptions. If anyone doubts the interest in business plans, a Google search returns more than 62 million and Amazon list more than 77,700 titles concerning this subject.

They are like fingerprints; no two are alike, even within the same organization. One further point, opinions about what makes a good finished product are like noses-everybody has one. The ones that work and prove to be executable are the best. With this in mind, let me offer my views about business plans at a macro level having written a sizeable number of plans for internal and external applications. One other point, a business plan can build a team quicker than any formal team building activity.

I have written business plans for all manner of industries: a coin operated jukebox company, airlines, travel companies, new product launches, and anti-aging product companies. It is not necessary to have a passion for the product or the company to write or develop a business plan. What you must have is a passion for aggregating information, getting involved with and understanding the service or product, and understanding the financials of the product or service. By financials I am not referring to having a CPA before you undertake the task, but rather understanding the presentation of the information and analysis/ numbers to support the activity being planned. Financials are important because they are the score card in the world of commerce.

There are many reasons for utilizing such a document. Is the final document going to be about implementing a decision already having been reached or is it about analysis and recommendations for a newly proposed activity. As noted above, a finished document may be for internal or external purposes. Externally they are often used to solicit funding for a start-up or joint venture. Whatever the purpose, do not confuse effort with say, a marketing or a production plan.

I mentioned the financial aspect of a plan earlier, so let me add this. Another fact about financials to consider: not all business activities are about making money. Point being, in most enterprises financial considerations are centric to the document. But there are some other considerations. For example, a few years ago I wrote a plan for a new subsidiary that was focused on developing an inventory of patents. The potential financial returns were years into the future. Those patents may or may not ever have commercial value. Another example is a non-profit enterprise that has need for a complete roadmap for growing their profile in a market, of which a marketing plan would be the centerpiece.

If a document needs to be developed that requires input from other disciplines-Finance, HR, Property & Facilities, Marketing, Procurement/Supply Chain- then most likely you are looking at a team building effort to get the job done.

In any event, don’t look at the task as only as a roadmap that leads to a profitable product or enterprise. Business plans are a great way to build team buy-in, force a thorough review of options, define objectives, establish benchmarks to judge performance, and help arrive at a plan-of-action. Ultimately, it can lead to a Project Management approach to implementing a plan and that can be as involved and detailed as is necessary.

Another consideration. Should the business plan be a document that is focused on selling an idea for a product or service? For many years I worked in a company that did not want anything in a business plan that could be construed as showing a bias towards or against a project. The mantra was to only present facts in the business plan. The Operations Research Department was there to review the analysis as being unbiased. To handle the “what if” scenarios or sensitivity analysis we prepared a supplemental analysis documents which were mostly financial oriented. Personally, I like a factual approach and use the presentation of the final document to point out the conservative aspects of the content.

Here is a recap of where we are in this discussion:

  1. Business plans formalize an understanding of the task with appropriate analysis leading to a plan-of-action.
  2. Not all business plans are for profit motives.
  3. Business plans are for an enterprise effort and not focused on disciplines/departments, e.g. Marketing plan, sales plan, HR plan, supply chain plan, etc.
  4. Business plans are a great vehicle to build a team effort.
  5. Plans can be utilized for formalizing metrics relative to achieving goals and performance measurements.
  6. Some complex plans might include a Project Management professional.
  7. There are internal and external audiences for business plans. Most external focused plans are for outside funding of projects.
  8. Be mindful of the ‘tone’ the plan projects to the reader. Tone refers to the impression a person gets from reading the plan; a subliminal feeling about the plan.

Organization and content of the business plan will evolve as it is prepared. For example, if the driving force of the plan is marketing or sales then a preponderance of the analysis and plan-of-action section will be more up-front and sales oriented in tone. With business plan’s the world is your oyster; think from the center out to the edges and think outside of the box.

The Process of Creating a Business Plan Teaches You Many Things

An investor, banker or lender will demand a plan before they make any financial commitment. Besides being a prerequisite to getting finance for your business, a plan also is a blueprint for efficient management of your new business.

It can be argued that in a fast-changing market, a business plan may quickly become obsolete. However, the insight gained from the planning process can prove to be an invaluable experience and come in handy to deal with the various challenges your business throws up from time to time.

A Plan Creates Tactics and Objectives

A plan describes the long term vision of your venture and the objectives you aim to achieve during a given time frame. It will also detail the tactics and strategies deployed to reach those objectives. A well structured plan will provide the basis for operational budgets, business procedures and management controls.

It must be remembered that no two plans are exactly the same, ever. Every plan is tailored to meet the specific needs of a business situation and the industry it operates in. For instance, a business plan for a coffee shop will be vastly different from one for an internet café. An internet café business document will have more technical details about the equipment and the type of hardware and software used whereas a coffee shop plan will focus more of the operational part.

While there is a lot of emphasis on the presentation, the substance of a business plan is most crucial. The tactics and operational strategies discussed in the plan should be practical and justify how they will help in achieving the end objective. There are various reasons for creating a business proposal. For large organizations, it is an ongoing process to steer the business in the right direction and plan for the crucial cash flow during various stages of growth and development.

Why the Process of Creating a Plan is More important than the Plan Itself

For large companies, business planning is needed to launch a new product. In such cases, the focus of the plan will largely be on investment appraisal. It is commonly believed that business documents are used for setting up a new business and for raising funds from investors. However, those are not the only reasons why companies and entrepreneurs develop a plan. In most cases, more than the value of a plan, the process of creating one is rather critical.

Plans are useless but planning is indispensable – the famous words of former U. S. General and President, Dwight Eisenhower aptly capture the reason why business planning is extremely critical for the success of any business venture. Whether it’s a business plan for a coffee shop or for a technologically driven engineering firm, the planning process helps entrepreneurs and others involved with the business understand how the business will evolve and adapt in the changing markets.