What is a business plan?
A business plan is a detailed description of your business, what you want to achieve in and with the business over a particular period of time and how you intend the results. You see it is a straightforward action plan and not some rocket science. Many business owners get agitated at the mere thought of a business plan. They tend to think of it as a very technical and complex exercise that is meant only for technocrats and professionals. No. So long you can come up with a business idea, you can draw up your business plan.
Your business plan simply states what you are going to sell; whom you are going to sell to; when you are going to sell it; how you are going to sell it; how much you are going to sell it; and what will be the return on investment will be.
A business plan does not need to be complex; neither does it need to run into tens and hundreds of pages. Simply, it is the action plan of your business detailed as to what you want to achieve, how you want to achieve them, when you want to achieve them and the safeguards to ensure you achieve them.
No successful business owner ever lazy’s about his business plan. Without a plan you are an accident waiting to happen, a bull in a china shop. You are like a pilot without a compass. Anyway is a way, including the dungeon.
A well crafted business plan is your rudder. With it you know when you are on course, when you are derailing, when the wind is taking you off course and when to adjust sails.
Take you business plan and business planning very seriously. Be diligent about it and be very realistic and honest with yourself. If you lie on your business plan you lie to no one but yourself – with your own hand pushing yourself off the clip. The street would not quiver when your business fails, but YOU surely would.
Prerequisites for a business plan
When writing a business plan,
- Identify your causes and effects. Your cause is an input or action or resource for your business while the effect is an outcome or result or consequence of some sort that your desire.
- Decide and identify what you are actually trying to achieve and always keep this in mind. This is your central aim.
- Build strong values or ethics into and around your business
- Define your mission statement. It clearly states what you are in business to do.
- Focus on effective use of investment and resources which will yield good return on investment
- Carry out your market research, including understanding your competitor activity, market and industry trends, market structure, etc. You can do your research using secondary data that is available on the internet, libraries, research companies, trade and statistical publications, professional associations and institutes. You can also carry out your own primary research using customer feed-back, surveys, questionnaires and focus groups.
- Bear in mind that you must survive the short run before arriving in the long run. Avoid the “Super-Eagles mentality”.
- Define your:
i. Product offering
ii. Service offering
iii. Sales proposition
You must understand and define clearly what you are providing to your customers. This description should normally go beyond your products or services, and must include the way you do business, and what business benefits your customers derive from your products and services, and from doing business with you.
9. Quantify the business you seek from each of your market sectors, segments, products and customer groupings, and allocate investment, resources and activities accordingly.
10. Write your business plan down on paper. Include in the plan sales, costs of sales, gross margins, and if necessary your business overheads
11. Ensure your plan shows what your business needs it to show.
12 .You must provide financial justification for the plan.
13. Above all a plan needs to be based on actions - cost-effective and profitable cause and effect; inputs required to achieve required outputs.
Business Plan Structure
Title page: Title or heading of the plan and brief description if required, author, date, company/organization if applicable, details of circulation and confidentiality.
Contents page: A list of contents showing page numbers, plus a list of
appendices or addendums allowing the reader to find what they need and navigate the document easily, and to refer others to particular items and page numbers when reviewing or querying.
Executive summary page: This should be no more than a page. State the key points of
the whole plan including conclusions, recommendations, actions, financial returns on investment, etc., clearly readable in a few minutes.
General Company Description
Details about the company, objects clause, incorporation details, history, Directors and their background, management and their qualifications and background, products and services, mission, vision and values.
Main body of plan:
a. Define your market and sector
b. Quantify your market - size, segmentation, relevant statistics, values, numbers, locations, people/users, and make this relevant to you business
c. Explain your market - sector trends, eg., growth, legislation, seasonality,
d. Do your PEST(Political, Economic, Social and Technological) analysis and show how it relates to your business
e. Explain your existing business (if any) - your current business according to sector, products/services, quantities, values, distributor, etc.
f. Analyse your existing customer spread by customer type, values and products/services including major accounts.
g. Explain your products, services and strategic propositions.
h. Explain you routes to market, gatekeepers, influencers and strategic partners - the other organizations/individuals you will work with to develop your market, including 'what's in it for them', commissions, endorsements, accreditations, approvals, licenses, etc.
i. Competitor analysis, e.g., SWOT analysis of your own business compared to SWOT analysis of each competitor
j. Do your sales/marketing/business plan projection for three years showing sales and sales margins by product and service.
k. List your strategic actions (marketing campaigns, sales activities, advertising, etc) that will deliver the above, with costs and returns. This should be supported with a spreadsheet, showing cost and return on investment for each activity.
l. Financial plans. Your business plan is a mere story without a financial plan. The financial plan reduces everything into money. After all, business is all about making money. Draw up your projected three year balance sheet and profit statement. These should be based and derived from all the foregoing.
m. Attach any further details and explanation to the accounts and plans.
Keep it simple. Keep to the facts and figures. Provide evidence. Be clear and concise.
Visit the tools menu to download a business plan format.