Business success is a result of proper planning. You need to have an in-depth, written strategy that illustrates what your objective is, the reason, and any milestone that should be met in order to achieve your ultimate goal. You must have a detailed business plan so as to describe your product, operation, and revenue goals in order to attract investors and acquire funding.
A business plan is an operational plan for reaching your objective.
Other than a general directional policy for the operation, production, sales, and profit, the most crucial function your business plan will act as the foundation and basis of any financial proposals you submit. A lot of business owners think that a business plan is a financial proposal. This is a misconception as these two are different and separate things.
A business plan is a guide to your business goal. A financial proposal is a funding request based on your business plan. They are closely associated, however, they are not the same. Preparing a good business plan takes time, research, and study, so do not attempt to do it all in one breath.
The best business plans for even the smallest companies are more than 25 pages. You will have to title each page and organize the various elements of your business plan into chapters. This is a logical arrangement of the information a business plan ought to cover:
- Title Page
- Statement of Purpose
- Table of Contents
- Business Description
- Market Analysis
- Business Location
- Current Financial Records
- Explanation of Plans for Growth
- Projected Profit & Loss/Operating Figures
- Explanation of Financing for Growth
- Summary of Business & Outlook for The Future
- Listing of Business & Personal References
Having a list of “questions to answer” about your business makes you look at your concept objectively and critically.
Inking all those down on paper enables you to adjust each detail to work like a smoothly oiled machine. You will be able to discover weak points and reinforce them before they evolve into bigger issues. Basically, you will be creating an operation handbook for your business that will keep your goals on track, and guide you in the successful management of your business.
Since it is your concept, it is very crucial that you do the planning. Talk with, and listen to, other people managing comparable businesses. Seek out the advice of your lawyer and accountant, but eventually, it needs to be your business plan. Remember that businesses fail because of lack of planning and poor management, and no business can achieve success without a direction.
On the first page (title page), type down the your business name with your business address. Following your title page is your statement of purpose page. This ought to be a basic declaration of your main business function. The statement of purpose ought to be straightforward, clear, and brief, and no more than two sentences.
You should then expand your statement of purpose with an “Explanation of Purpose”.
Here you state why you require an explanation. Remember to keep it simple and short. Explanations of business purposes are rarely more than a half page.
Next is your table of contents page. You do not have to worry about this till you have completed your business plan. It is good to have a list the chapters you want to cover and check off each one whenever you finish that portion of your plan. You will be able to work around each phase of your business plan whenever an idea comes to you.
You do not have to conform your planning to the chronological order of the chapters of your business plan. In describing your business, it is best to start where your statement of purpose leaves off. Describe your product and production, and who is responsible for what. What makes your product unique, and what gives your product an edge in your market?
You can briefly summarize your company history, present situation, and future success.
Next, describe the buyers you want to reach, and why they want to buy your product. Append the results of any surveys you might have carried out. After you have defined your market, describe how you plan to reach that market.
Identify who are your competitors in the next chapter. What are their weak and strong points? How do you plan to capitalize on their weaknesses and match their strengths? The chapter on management need be an elaboration on the people operating the business.
It is essential that you “paint” a strong picture of the people in your top management because investors will be “buying” into these people as much as your concept. Investors want to know that the people in charge know what they are doing, and have the abilities to make money for all of them. The next chapter is a picture of your financial status. Basically, this is a statement of your income and expenses for the last six months, including your business tax records for the last three years.
The next chapter is an explanation of how you plan to keep your business growing.
A detailed plan of what you are going to do, and how you are going to increase your profits. These plans need to show your goals for next three years. By breaking down your goals into annual milestones, your plan will be seen as more realistic and reasonable.
Following this explanation, you will have to list out the projected cost and income of your three-year plan. As soon as you have these two chapters on paper, your entire business plan will fall in place and start to make sense. Include a credit report of yourself in the documentation chapter. If you own any patents, copyrights, licenses, or exclusive rights, include these too.
You must also include any leases, special agreements, or other legal papers that may be important to your business. In conclusion, summarize your business by reiterating your business description. The last page of your business plan is just a “courtesy page” listing the names and contacts of your references. That is it!
Now you can relax, take a break, and feel good about yourself. Congratulations, you have completed your business plan, may all your dreams come true!