Business plan -10 reasons, types and elements of a business plan
A Business plan is a document containing a road map that provides clues on how a Business plan can be started, continued with and sustained.
Why Business Plan?
- A Business plan is necessary for a concise understanding of a particular startup.
- A Business plan reduces the event of startups crashing at its first quarter of running.
- A Business plan showcases seriousness to whomever that it is presented to.
- A Business plan outlines goals that must be achieved.
- A Business plan helps an entrepreneur reduce the risk of falling into a trap of underfunding.
- A Business plan helps in the setting of priorities.
- A Business plan helps the growth of accountability.
- A good Business plan helps set milestones that can be achieved.
- A good Business plan serves as a reminder for regular keep up with tracks, set.
- A good Business plan sets right better cash flow management.
The purposes of a Business Plan
- A Business plan well crafted and created attracts secure funding.
- A Business plan focuses on the goals of the entrepreneur.
- A Business plan enables an investor to define and explain a Business.
- A Business plan exposes the unique value of the proposition to whomever it is presented to.
- A Business plan outlines the mission of the Business and gives a futuristic idea of what should be expected.
Elements of a Business Plan
A Business plan must contain the following element:
- Executive summary: an executive summary summarizes what you expect to achieve or accomplish from the Business. It is the preamble of the Business plan.
- Company description: this discusses the objectives of the business, its goals, customers that will be served, the uniqueness of the products and what makes your company different from others already in the industry.
- Market analysis: here the knowledge of the market which an entrepreneur attempts to venture into is discussed at length. The data and statistics of the present market emphatically elaborated.
- Competitive analysis: a good Business plan must showcase its ability to compete with the already present players in the industry of its choice.
- Description of management and organization: a Business plan will have to map out its chain of command. From the company executives down to the non-administrative bodies. It also indicates the ownership structure. i.e whether it will operate as a partnership, sole proprietorship, a limited liability company e.t.c
- Breakdown of products and services: the description of products and services gives whomever that is reading the Business plan an idea of what you’re creating or selling, how long your products are meant to last and how they’ll meet any need.
- Marketing plan: the issue of marketing the services in the Business plan is a vital issue that must be discussed. The steps that will be taken in the process of marketing and the stipulated budget for the process.
- Sales strategy: the marketing is done and the goods and services are ready to be sold. The question now is how do you sell? How will the products and services reach the right people? What are your sales target?
- Request for funding: a lot of Business plans are written with the intention of getting funding. An entire section will be dedicated to this. The amount of money raised and how the money raised is put to use.
- Financial projections: this reveals the financial goals that have been set to be achieved for the first 12 months and annual earning for the second to the fifth year of Business.
Types of Business Plan
- Startup Business plan.
- Internal Business plan.
- Strategic Business plan.
- Feasibility Business plan.
- Operations Business plan.
- Growth Business plan.
Disadvantages of a Business Plan
- A Business plan can be rigid, making its administration inflexible.
- A business plan can be time consuming and expensive.
- The business plan strives for objectivity but its nearly impossible to exclude bias when planning a future course for a Business.
- Business plans have a way of conveying false certainty of success.
- The accuracy of facts and information about the future in the business plan may likely be false.
- Business plans have a tendency to encourage a sense of security against risk.