So you want to start a business, but have no clue about how to get to the point where the operations begin? Well, the first step that you need to focus on is to keep your business idea in your mind and start writing a business plan. This step in your journey is one of the most crucial step that will surely reap you benefits!
“Why do I need to write a business plan?” you may ask yourself
It is because a detailed and vast business plan can provide you with a glimpse of your business in the future, how it will perform and help you identify areas where you need to step in and take special care of. For example – You have an idea to start a solar panel manufacturing business and you created an extensive plan showing the numbers for the next seven years. You see that in Year 5 your profits are suddenly going to decrease. The reason for that is because in the same year, the relief that you were getting due to a government subsidy scheme expires and hence, your expenses go up.
Observing these kinds of details in the business plan will help you to come up with an alternative solution for the same. For example – You can now focus on decreasing costs within five years of inception to not get backtracked by the expiration of the scheme. The cost reduction technique can be anything, like investment in better machinery that increases your productivity.
You can now add this cost reduction detail in your business plan that will impress the investors and make them think you are serious about the future of your business. The cool thing about the B-Plan, is that you get all the information that you are going to need in one single document. This information will be valid for a number of years and also act as a reference point when comparing the actual with the planned.
So, coming onto how you should start with writing a business plan, here’s the structure that you will need to follow-
- Cover Page – This should include the name of the business as well as your name and contact information.
2. Table of contents – A brief listing of all the topics in your plan to help the reading with find-ability.
3. Executive Summary – This should include a description of your company’s vision, mission, long term goals, opportunity. Basically, you need to tell your audience what your business is all about, its future. Also, you must include a management team summary providing some details about the team and what role best fits them to their capabilities.
4. Business Description – Here you further expand your business plan and provide your audience with a long term and a bigger perspective about all the situations and events to come. You tell exactly how your business will work, in detail. For example if you have a service business, you will tell exactly how the operations will be run. The smallest detail must be given. Also, you could write down how you plan to expand your business in the future explaining in detail the strategy you will implement.
5. Industry & Market Analysis – Industries refer to all the companies that will take part in selling whereas the Market is the place where the industry will sell its product or service. Performing Porter’s Five Forces Model will help here.
– Industry Background – This should include the answers to all the questions you may think of when thinking about the industry so as to forward your business. For example – An overview, Growth potential, Industry landscape, emerging trends, the company’s Unique Selling Point, Barriers to entry, all should be included.
– Competitive Analysis – Here, you need to identify your potential competitors and present how you will distinguish your offering from theirs.
– Market Analysis – Focusing on the last aspect on analysing the business environment, you need to look out for your target market in this aspect of the B-Plan. Identify your target market with their needs and also the rationale behind them purchasing your product or offering. Lay out statistics about the market size and future growth potential for the same.
6. Operations Plan – Now you need to focus on the day to day workings of your business. This section will provide your audience with a general idea on the flow of your everyday workings and also the strategies that will support it. Use visual illustrations to make the processing of the data easier for the reader. The operations plan should include information like when your business will achieve breakeven, your supplier information, logistics (supply and distribution), location, and your employees.
7. Marketing Plan – Here, you need to influence the consumer to buy your product or service. You are basically, promoting your value proposition. For you venture’s success you will need to consider and pre test a lot of marketing strategies and this is the section where you will provide the details for the same. You need to also integrate your company’s vision and mission with the marketing plans and strategies. Some aspects it should include are, details about the product or service, the price at which it is being offered, the places of distribution, advertising and promotion in multiple phases.
8. Financial Plan – One of the most important part of your B-Plan would be the financial plan. It will show the reader your current status and your future forecast of the performance. It will represent the risk involved and the return on investment over a period of few years (4-6). This should include the capital requirements (how much you need to raise, how will you raise through investors or venture capitalists.. ), where you will use the money, etc. You need to prepare an income statement for the same along side with a balance sheet and a cash flow statement. Breakeven analysis, assessing risk and reward, forecasts and exit strategy all will come here.
Keep in mind that while making a business plan you will make a lot of assumptions like the growth rate over a period of years. Your plan may not be 100% accurate, but it will be a start. It will be like a guide book for you, an essential and you will NOT regret all the time you spent writing it!
BUILD A BUSINESS 