Importance of creating a business plan
A business plan is a sneak peak of the future of your business. It is a kind of written statement of the future of your business. It is a document which describes the plan and the necessary resources to carry out that plan. As Benjamin Franklin puts it “If you fail to plan, you are planning to fail!”
In the modern era of technological advances it has become important to have a business plan. It is necessary to have a written, clear strategy in order to clearly communicate the vision of the business to the investors who are interested in investing. The key is to keep it simple yet having all the necessary and adequate information in order to be convincing and promising. This can help to communicate with other stakeholders of the business as well.
For new businesses, a business plan is the best way to ensure that whether the business idea is feasible or will do well in the long-term. It also helps in understanding and studying the market. Not only this, but a business plan also aids to form a strategy for the new start-ups in the form of viability and future stability. It is kind of a safety net for the new business and will determine the future prospects of the new business.
Another aspect in which a business plan can help the business is when it is deciding to expand or looking for other avenues in order to diversify the business. It will also help the entrepreneurs who are looking forward to explore other markets for their business, by providing a clear roadmap towards success. In other words, it helps to formulate the strategy of the business. Since it focuses on both financial and operational objectives of the business it can provide a guideline to the business about crucial areas such as budgeting and market planning.
When a business requires capital for operational and expansion activities and approaches any financial institution it cannot attain a loan without a formal business plan. It is a mandatory requirement for any business seeking to obtain loan to have a business plan so that the financial institution can assess the repayment ability of the business. Having a business plan can increase the chances of getting financial loans from these institutions and which in turn help the business to expand.
Moreover, a business plan can help the business to secure any other professional support required such as lawyers, consultants, leasing arrangements or accounting services. A business plan also helps to provide a guideline to the key personnel of the business such as executives, managers, and other employees who possess strategic responsibilities of the business. As it clarifies the objectives of the business so that everyone in the business works on the same pattern in order to achieve success.
The increasing competitive environment in which the businesses are operating makes it necessary to have a business plan, so that the strategy of the competitors can be easily analysed and timely response can be formulated. This in turn will help the business to position itself in the market and identify those areas which are not yet explored.
What constituents make the business plan outstanding?
The approach you follow to write your business plan makes it distinguished and understandable for your possible readers.
The first aspect to include in the business plan is the Executive Summary. It is a summary of the key elements which are included in the business plan. Since it is the first thing which the readers will set their eyes on, so it is very important that this section contains all the headings which are included in the business plan.
An industry overview is an integral section of the business plan. It contains the market trends, major industry players, and an estimate of the industry sales. This section also includes a summary of the company’s position in the industry.
Market Analysis is the study of the market in which the company wants to launch its product or service. This is a detailed study containing the geographic location of the company, demographics as well as the steps required in order to be recognized in the target market along with the resources required for it. The tone of this section must be convincing enough in order to give an idea to the potential readers that, the company is well-aware of its customers, target market and is able to make a sales prediction as to how well the company will do in terms of revenue.
The interesting section of your business plan is going to be the competitive analysis in which the analysis is being done of the competitors directly or indirectly. It is an assessment of their competitive advantage along with the strategies to be used in order to overcome the entry barriers of the target market. It is preferable that this section must persuade your readers that the company is offering some really distinguished products or service as compared to its competitors. This will build the investor confidence and will give an assurance that the business will do well in the long-term.
Marketing plan is yet another crucial aspect of the business plan. It is a detailed study of the sales strategy, advertising campaigns, promotional activities and the long-term benefits of the company’s products and services. The unique selling points of the business must be included in this section which must contain points about how the company is willing to introduce its products or services in the market, distribution channels, the way it will be marketed to the potential customers.
Along with these sections it is important to include the financial plan which will brief the readers about how the business is willing to meet its financial needs. It must contain the income statement, balance sheet and the cash flow statement along with the necessary notes to the financial statements.
Other than that factors which will make the business plan attractive is its appearance, tone, and the placement of the sections. All in all this document must be such that it does wonders on its own and the readers are impressed after going through it. As it is rightly said “looking successful is half the battle to being successful”.
By Madiha Kauser-
ACCA is currently working as a freelancer. She is a blogger, article writer, and editor. Her interests include reading and research.
