To run a business, entrepreneurs should consider various points—from the branding of the company to the number of items to purchase or produce. In fact, every step taken by the business should not come from a hasty decision. As enterprises are fragile to the shifting trends in the industry, the processes and plans of the management and owner have to make preparations. With that, companies, no matter the nature of the business, have to secure a business plan to map out the different goals and circumstances that the enterprise will face in the coming months. This article features a comprehensive look at the content, types, and effectiveness of the tool.
What is a Business Plan?
A business plan is a professional and formal document that contains information about the company and its proposed goals for a specific timeframe. Moreover, the tool is a guide or an outline of processes that the company should continue doing, change, or add to improve the business. Some planners include risk management plans and operational plans in the business plan to make the material more informative for the reader. At times, other entrepreneurs choose one-page business plans to avoid the hassle of reconstructing the content. On the other hand, most business owners choose lengthier business plans to make sure that everyone understands the purpose of the plan.
Importance and Advantage of Having a Business Plan
Unlike what most people presume, business plans are crucial for all kinds of business. Whether the company is a startup or an established one, having a business plan will make procedures a little bit easier. But why is the tool important for companies? Well, a business plan is a guide consisting of specifications and processes that assist the company when making decisions to achieve predetermined goals. The contents of the business plan came from the planning phase of the management and owner. Therefore, the steps and methods written in the document came from the completed assessment of planners in the enterprise. Furthermore, having a business plan is advantageous as it prevents the inconvenience of planning and deciding on the spot.
Types of Business Plans
Business plans are must-haves for different entrepreneurs in any industry. A vast majority of the people in the business sector are aware of having a business plan in the office. But this material comes in varying types to meet the needs of the businesspeople. This tool is usually part of the checklist for business processes, together with other planning materials that aid the progress of a business. So, here are the five types of business plans and their uses.
Startup Business Plans
For startup businesses, utilizing a business plan is as crucial as choosing the marketing strategy to use for promotions and endorsements. Without detailed and clear cut instructions, the newly formed business will not prosper even before starting their distribution operations or opening stores. The startup business plan often includes startup funding methods, market assessments, and potential investors. Importantly, marketing approaches that fit with the description of the business is also in the material.
Strategic Business Plans
All companies have goals to achieve. And accomplishing objectives means businesses have to go the extra mile and strive hard. Therefore, they have to find strategies that work best with their current targets. Strategic business plans consider all the aspects of the business, instead of picking a portion only. By recognizing the critical points in the market and selecting only the strategies that address it, the enterprise can focus on the growth of the company. Social media marketing is an excellent example of a strategic plan that companies implement to boost their viewership.
Operations Business Plans
This specific business plan centers on the implementation and follow-up of various operations happening within and outside the bounds of the company. Operations business plans consist of the year-long (sometimes, month-long) production points that the employees should remember. Along with the proposed plans and schedules, it also contains the workload and obligations of the workers.
Internal Business Plans
Internal business plans concentrate on the proceedings within the business. By that, the plan looks at the overall state of the enterprise. Then, it formulates a sustainable system to make sure that the company will avoid pitfalls or lessens losses in the revenue. This business plan is essential for the management as it provides relevant information that will become the benchmark for some marketing decisions in the future. Moreover, internal business plans are closely related to business continuity plans, especially when little revisions take place in the company over a few months or years.
Growth Business Plans
Often called expansion plans, a growth business plan is often for the investment and merger proposals of the company. As a development plan for the enterprise, it focuses on the advantages and disadvantages of choosing other brands as partners or investing money on projects. It includes a thorough discussion of the assessments—financial projections and market analysis reports—completed by planners of the company.
The Contents of a Business Plan
After establishing the type of business plan that the company needs, the planners can proceed to gather the necessary information needed in the plan. Although the sequencing of document pages depends on the preference of the business owner, certain parts in the document follow a pattern. Before writing the business plan, it is wise to have consultations with marketing analysts, budget planners, and accounting officers. Here are the essential parts of a business plan.
It is always best to start with an overview of the company. Part of the section is the simple breakdown of services and products offered by the enterprise and the main features of the company. However, businesses should refrain from cramming all information in this section of the business plan as it is the designation of other parts of the plan. Usual company profiles include the location or address of the headquarters, the mission statement, owner(s), and the visionary goals.
For this portion of the plan, the planners work on summarizing crucial aspects of the business that will be relevant in deciding whether to continue with the plan or revise everything. The executive summary has key points to remember: (1) an organized description of the business processes undertaken by the company, along with the market it currently has; (2) a discussion on the work operations of the business and the management that handles the affairs; (3) the assessment of the financial capabilities and requirements of the company; (4) highlighting the achievements and improvements of the business. Although not rigid, the owner can add more to the summary without being too excessive.
Management and Organization System
No business prospers without the helping hand of other professionals in the field. By saying that, this part of the business plan covers the information about the people running the company. It has three elements: (1) the founder(s) and their skills, experience in the field, and personal success; (2) the coverage and workload of officers overseeing the production; (3) an organization chart to visually see the hierarchy in the management and the obligation of the employees in the workplace. The planners have to be more familiar with the business structure to complete the diagram and make this section of the business plan accurate.
Services and Products
Another essential component in a business plan is the list of the products and services offered by the company. The listing method does not include all the details of the goods. Instead, it only picks out indispensable information like the price, quantity, quality, and the ingredients (if necessary). Others also add pricing plans and production schedules in this portion of the plan. When the company has intentions on shifting its line of goods, it should be on the document.
Market Analysis and Opportunities
The scope and limitations of the business are crucial in determining the feasibility of the proposed business plans. Through the market analysis and audience assessments done by the management, the company can pinpoint the opportunities that will be important in the growth process of the enterprise. Also, a competitor analysis proves to be an essential material that companies should use to create better promotional plans. This section solely focuses on finding ways—accomplished through thorough research done by analysts and researchers—to increase the market of the business.
Marketing and Sales Strategy
Accompanied by the analysis of the market is the marketing and sales strategies that would presumably boost the revenues of the business. For this part, the planners make use of the available marketing policies or approaches in the market. The marketing plan must have relevance to the objectives of the business, and the methods should be appropriate to the company. For instance, if the business concentrates on construction, the sales plan should highlight the promotional tools that contractors and subcontractors have access to. Again, there are different strategies for the convenience of businesses.
Financial Status, Projections, Request
Like every business in the market, the financial status matters. Even when the company is popular with the public, if it lacks the proper resources, it will not keep up with the demands of the clients. Business plans have to discuss the financial stability of the company to prepare for budget planning and financial requests. By knowing the financial state, the business can act on the ways that could help overcome the predicament of insufficient resources. Inspecting the income statement and balance sheets is one way of determining the present finances of the business.
An optional section of the business plan, the appendix holds a copy of other documents that can be essential for the business. It also contains the materials that can be a reference for the readers. For example, a sample of the investor contract and a cost estimation plan is important for the company. Cash flow statements can also be additional material in the document. Some advertising tools to include are brochures, magazines, flyers, and email newsletter samples.
Five Tips in Writing a Successful Business Plan
The concepts of running a business may sound easy, but the creation of one takes time and effort. It demands the keen eye of planners and the focus of esteemed analysts. To make the writing process less stressful, the writers can follow these five easy steps. On the list is a systematic method of ensuring that the planners can save time when writing the business plan. Here are the five steps.
Know the Purpose of the Business Plan
Everything starts with identifying the pivotal points in the business. The planners have to know and understand the purpose of the plan. Moreover, they must recognize the plausible changes that will come when the company implements the actions or activities in the business plan. By acknowledging the intentions and goals of the company, planners can create a plan that fits the needs of the business. The workload of writing the business plan also lessens when the writers have an objective to meet.
Set Goals (Long Term and Short Term)
After determining the purpose of the business, the planners can start setting up the long term and short goals of the business. Some examples of long term goals are partnerships with other businesses and investments in projects not related to the company. On the other hand, short term goals are usually promotional plans for a product or service and techniques in increasing the workforce for a specific quarter of the fiscal year. In some instances, short term plans become long term plans when the results remain positive for the business.
Do Thorough Research
People argue that when people are more knowledgeable, they have the burden and responsibility of informing the public. In some sense, this idea is true when a discussion about the importance of being informed comes into mind. In business, doing research is one of the essential activities that planners have to keep doing. The changes in the market dictate businesses to do the groundwork on what approaches work best for the company. Furthermore, research helps the business align with the status of competitors and allies.
Discuss Constraints and How to Deal With Them
When the goals are complete, the planners have to figure out the constraints of the business with experience. The limitations are not only about the problems with capturing the attention of audiences, but also the possibility of technical disruptions in the business. Legal constraints are also common in businesses. After knowing the issues, the planners should make a document that discusses the options to make dealing with the complications easier. Having a professional legal structure in the company can also amend the headaches of legal paperwork. If the obstacles are on the funding, a financial plan should be a priority.
Remember The Audience or Target Market
Attracting the target market and encouraging them to try the product or service is one of the goals of various businesses. Even well-developed brands keep on improving their advertisement materials to capture the attention of their audience. So when making the business plan, the writers have to remember the market. If the plan does not consider the possible reactions of the patrons, it would be a bigger problem for the company. Therefore, the plan should fit not only to the goals of the company but also the eye of the selected audience.
In business, the odds of winning the attention of the target audience multiplies when the right mix of approaches are incorporated in the plans of the company. As enterprises aim to gain more customers, they have to consider expanding their knowledge on what the trends are in the field. Talking is not enough—there should be an action plan. By that, companies must continue using business plans to set up the processes and goals of the entity. Consequently, owners and employees have a better understanding of the status of the company. Later on, it would encourage everyone to work harder for the growth of the business.