If you agree with me, any life goal needs a plan. Not necessarily penned down, but at least a plan. Just as most people plan to acquire formal education to be successful in life and a chef buys the necessary ingredients for his dish while arranging methodically in his mind, how and when each ingredient would be applied.
Similarly, your business needs a plan, but this time, a written business plan.
Can I be straight up with you? Some startups with solid business plans face unexpected challenges. Some even crashed along the way. What do you think would happen to a business that doesn’t have one?
The truth remains every intending startup needs a plan. Or perhaps, the serious ones among them. Whether you’re an intending SME or multinational company, you need a business plan.
A business needs funding, and to pitch an investor, you need a viable business plan. A plan illustrating that you understand the crook and cranny of your intending business — the challenges involved, and its limitations.
Often times, investors search for a winning business plan — a plan that is solid enough to worth their hard earned cash. Don’t forget that these investors invest in you to make more cash.
They have no time to waste. If your plan doesn’t make sense to them, they simply walk out without a second thought. I’m sure you don’t want to experience such.
I have compiled in this piece, what most investors regard as the winning business plan but first…
What is a business plan?
A business plan highlights your business goals, why you think these goals are attainable and your intended step-by-step guide to achieving it. Most failed startups embarked on their business without a business plan.
How you intend to use the funds and expected profit on investment per time — monthly, quarterly, or yearly as applicable.
Mostly, a plan consists of about 20 to 35 pages written in simple business terms. The simpler, the better.
Reading ease is as important as the contents. A business plan should be well organized. Tables, graphs, charts, bullets e.t.c., should be implored for clarity.
Ok, here we go! The essentials of a winning business plan:
1. Business / Product and/or Service Description
This defines the product and/or service that your business would offer and who your prospective clients are.
What problem do your product and/or service solve? Why is this even a problem in the first place? These are questions answered in this section.
The product and/or service is the basic propeller of your business or company. If it includes manufacturing, how you intend to manufacture and the basic equipment needed should be included.
If it is a service, how you intend to render this service to optimize profit shouldn’t be left out either.
Most products and/or services have their own keywords, just like integration in engineering could be different from integration in economics.
Regardless of how complex these keywords are, be sure to break them down for every non-technical person to understand.
2. Executive Summary
Most novels have a summary that gives an insight to what the whole book is all about. Often times, the summary of a novel is what readers glance through to decide on the right book to buy.
Similarly, an executive summary summarizes and highlights your business plan. It is often one or two-paged. To get the most out of it, it is better written last.
Many a time, your executive summary decides whether an investor would read further or ignore it. The popular quote “Don’t judge a book by its cover” doesn’t work here.
Don’t forget that these people don’t have time to waste, write with utmost clarity. Write this part like it is the only part that matters.
3. Target Market
Understanding your customers and competitors is a step forward for any startup or existing business.
It enlightens you on the strategic advantage that your business has over competitors and gives you an insight on economic changes and customer behavioral and occupational changes
This aspect encompasses the research done on customers. It explains your potential customers’ behavior and involves a comprehensive market analysis.
Why this product and/or service have been failing to hit its target market over the years and how to bridge this gap should also be included.
Your plan should also indicate your market location, growth intensity, and trends.
How you intend to overpower the market by subsiding your competitors and how you intend to use your competitors’ weaknesses to your advantage shouldn’t be left out either.
4. Organizational Coordination
This is also another essential of a winning business plan. It is an overall outlay of your organizational structure.
Would your workers be classified as a team or each worker with his own hierarchy? If you intend imploring both options — team and hierarchical classification, be sure to state it in your business plan.
The responsibility and job description of each team or individual should also be included. Whether your workers are full time, part time, or on a shift basis shouldn’t be left out either.
The lists of your consultants, if you have any, also belongs to this aspect of your business plan. How do you relate to them? How often do you consult them, is it occasionally or usually? Be sure to include your answers.
As time goes on and business grows, do you plan to outsource jobs or you would hire more staff? Why you chose either of the two should also be included.
5. Founder(s) and/or Management Team
The acquisition of maximum output from an average input requires good management.
The management and/or founder(s) are the souls of any business. They are the decision makers and the drivers. Labour, raw materials, and capital would be a waste with the absence of a good management team.
Your plan should highlight why you’re the best manager for the business. Your professional qualification, entrepreneurial experience, product experience and/or leadership qualities should be listed too.
If it is a team, list the members of your team, their hierarchy, and how they contribute to the overall business success.
These makes investors feel safer — knowing that their cash is in good and capable hands.
6. Marketing and Distribution
A business without a marketing and distribution plan remains incomplete.
A solid marketing plan increases product and/or service awareness which directly affects the overall population of your proposed customers.
Distribution deals with how your good and/or service reach your clients. For example, you marketed “pizza online ordering service”, but you didn’t cater for delivery. That sounds awkward, right?
This is the more reason why marketing and distribution go hand-in-hand.
How do you plan to market and distribute your good and/or service? Why are you using that strategy? What nullifies other seemingly viable options? If these plans fail, what is/are your failsafe(s)?
These answers stress to investors that you’ve done the necessary research and you’re good at what you do.
7. Financial Summary
Sometimes, this is the most voluminous part of your business plan.
If you have launched your business, you need to highlight how you obtained startup capital, how many investors are involved with date, how much you contributed, and how far you’ve gone since startup.
If you obtained a loan; how well your repayment plan progresses, how much you have paid, and how much you’re owing should also be included.
If you’re yet to launch, you need to explain the financial requirement, how much capital you’ve gathered, and how much more is needed.
Your plan should also highlight how much operating and reserve capital is needed. If you intend to obtain a loan in a near or far future, it should also be included.
In summary, this aspect of your business plan encompasses how much came in, how it was received — investment, revenue or loan, how the money was used, and why that is the best way to use it.
8. Business Goal(s)
This highlights your wishes and dreams for the business. How far you hope to go and in how long belongs to this part of your plan.
It is better illustrated with approximate figures for example: “By 2020, we hope to have started mining and halt raw material importation because we hope to have acquired a 20000 hectares of land to serve that purpose. This should be possible because we would have sold 2000 tons of necklaces and make about $900 million dollar profit within the next 3 years.”
Oh oh, my figures are outrageous. Yes, I know. So be sure to state the right figures. The best and worst-case scenarios should also be highlighted.
9. Legal Documents
A winning business plan should state all the rules and regulations that bound or would bound the company by law.
This may be related to ownership or your product and/or service. By ownership, I meant which part of the company belongs to who and how. Perhaps, it was due to cash, skill, or human investment.
By product and/or service, some products are bound with a maximum amount of produce to be manufactured in a specified period of time. This may be because over-consumption of the product harms the customer.
Summarily, any document that you have signed legally should be attached to your business plan. Any document that you may be inclined to sign in the future should also be stated.
10. Other Relevant Documents
Your plan should include any other relevant documents like CV, profit and loss statement, research records, market survey statistics, e.t.c.
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