Business Plan

Business Plan

A business plan precisely defines your business, identifies your goals, and serves as your firm’s resume. The basic components include a current and proforma balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make good business decisions. Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan application. Additionally, it informs sales personnel, suppliers, and others about your operations and goals.

Importance of a Business Plan

The importance of a comprehensive, thoughtful business plan cannot be overemphasized.  It is important for:

– outside funding

– credit from suppliers

– management of your operation and finances

– promotion and marketing of your business

– achievement of your business goals and objectives

Despite the critical importance of a business plan, many entrepreneurs drag their feet when it comes to preparing a written document. They argue that their marketplace changes too fast for a business plan to be useful or that they just do not have enough time. But just as a builder won’t begin construction without a blueprint, eager business owners shouldn’t rush into new ventures without a business plan. It is true that the marketplace changes too fast for any long-term business predictions to come true; nevertheless, the first year’s month-by-month predictions are usually 90% true. Thereafter, slowly it becomes calculated guesses, but still planning provides the impetus, energy, and drive necessary for the business to achieve its objectives.

Before You Begin

Before writing your business plan, you need answers to the following core questions:

– What service or product does your business provide and what needs does it fill?

– Who are the potential customers for your product or service and why will they purchase it from you?

– How will you reach your potential customers?

– Where and how will you get the financial resources to start your business?

The clearer are your answers to these questions, the better will be your business plan. Be as detailed as possible. Writing the answers down provides a firm ground on which your business plan may be based.

Tentative Index of a Business Plan

[ Note: The index will change according to the information obtained/to be disclosed. Not all information may be disclosed. For example, if you are not applying for a loan, then the last three year’s tax statements of principals need not be disclosed. Much other information can be added or deleted as per the market’s demand and supply conditions with respect to your business.]

INDEX

1.0 Executive Summary

1.1 Description of business

1.2 Objectives

1.3 Mission

1.4 Marketing

1.5 Competition

1.6 Operating procedures

1.7 Personnel

1.8 Business insurance

1.9 Keys to success

2.0 Company Summary

2.1 Company Ownership

2.2 Company History (for ongoing companies) or Start-up Plan (for new companies).

2.3 Company Locations and Facilities

3.0 Products and Services

3.1 Product and Service Description

3.2 Competitive Comparison

3.3 Sales Literature

3.4 Sourcing and Fulfillment

3.5 Technology

3.6 Future Products and Services

4.0 Market Analysis Summary

4.1 Market Segmentation

4.2 Target Market Segment Strategy

4.2.1 Market Needs

4.2.2 Market Trends

4.2.3 Market Growth

4.3 Industry Analysis

4.3.1 Industry Participants

4.3.2 Distribution Patterns

4.3.3 Competition and Buying Patterns

4.3.4 Main Competitors

5.0 Strategy and Implementation Summary

5.1 Strategy Pyramids

5.2 Value Proposition

5.3 Competitive Edge

5.4 Marketing Strategy

5.4.1 Positioning Statements

5.4.2 Pricing Strategy

5.4.3 Promotion Strategy

5.4.4 Distribution Patterns

5.4.5 Marketing Programs

5.5 Sales Strategy

5.5.1 Sales Forecast

5.5.2 Sales Programs

5.6 Strategic Alliances

5.7 Milestones

6.0 Web Plan Summary

6.1 Website Marketing Strategy

6.2 Development Requirements

7.0 Management Summary

7.1 Organizational Structure

7.2 Management Team

7.3 Management Team Gaps

7.4 Personnel Plan

8.0 Financial Plan

8.1 Loan applications

8.2 Capital equipment and supply list

8.3 Important Assumptions

8.4 Key Financial Indicators

8.5 Break-even Analysis

8.6 Projected Profit and Loss

8.7 Projected Cash Flow

8.8 Projected Balance Sheet

8.9 Business Ratios

8.10 Long-term Plan

9.0 Supporting Documents

9.1 Tax returns of principals for last three years Personal financial statement (all banks have these forms)

9.2 For franchised businesses, a copy of franchise contract and all supporting documents provided by the franchisor

9.3 Copy of proposed lease or purchase agreement for building  space

9.4 Copy of licenses and other legal documents

9.5 Copy of resumes of all principals

9.6 Copies of letters of intent from suppliers, etc.

Conclusion

A good business plan is imperative for any business be it small, medium, or big if it needs to survive in today’s tough business environment. Like a warrior sharpens his sword for 6 hours for a battle of 6 minutes, similarly a businessperson should take several days to prepare his business plan in order to survive for many years.

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