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  • Apophia

Everything You Need To Know About A Business Plan And Why You Need One

Updated: May 13, 2022

Planning is a fact of life. Every business needs a plan.

Trust the information a business plan holds. It speaks, and gives guidance and direction towards executing work and achieving goals. Additionally, business experts have it that a business plan can measure results and make informed decisions. It also helps foresee risks and threats alongside mitigating measures to overcome them and opportunities and strengths available for the growth and development of the business.

No business can develop fully in the absence of a business plan. Writing a business plan can help you determine if your idea is feasible and provide direction. With a business plan, you will be able to know every next step that should be taken - Fred Chege

A business plan bears operational plans, when, how, and where the business should get started. A business plan is a step-by-step guide that shows how a business will run; it might seem a little complicated, but it gives results in the long term when followed appropriately in line with the available or given guidelines.

A business plan is defined as a written document that gives full details about the nature of the business, marketing, and selling strategies, how you hope to get funds, estimated profits, and losses.

It is a road map that provides directions for a business. For example, a business plan sometimes focuses on the legal structure, ownership, location, what you sell, your customers, how you sell (commonly focuses on the channels of distribution), your competitors, layout of how you plan to work, the production, the sources of your finances, what you expect to be the return of your investment and so much more; we will look at it details at a later time.

While writing a business plan, make sure you;

1. Keep it precise and brief

Your business plan should be kept short, direct, and on point. Keep irrelevant information and details away from this document.

2. Know the people you are speaking too

This should be your emphasis as a writer. While drafting your plan, make sure that it is directed to your audience/customers. Let it speak to them so that even when your business gets established, your audience will not need to doubt but rather support the idea.

3. Do a pre-test or market research

Don’t just make a plan without knowing how the market behaves. Business research helps you know more about your customers' needs, what your competitors are doing and how they are doing, and what strategies you can use to do better than them.

4. Set your goals

Setting goals helps to stay in line with what you aim at and protects you from diverting and going to what I would call unnecessary. It also keeps reminding you of what you have to achieve. You can set daily, weekly, monthly, quarterly, bi-annual, or yearly goals but above all, make sure that your goals are smart.

Why You Need A Busines Plan

1. A business plan is a key to the success of the business

A business plan gives direction and aids organizations/ businesses set smart targets and goals, how and when they will be achieved. In short, a business plan helps to give summarized details of what the business is all about and its next steps.

2. Guides on where to put emphasis

If you are a new entrepreneur in the field and perhaps you are not aware of what to focus on in your business, a guide would be the best option. A business plan. It helps you find where you need to have your efforts piled to get a good return upon investment. The early days of a startup can be frustrating. With a business plan, the probability of having such shortcomings is limited as the plan acts as a guide.

3. Run the business efficiently

A business plan helps to coordinate and run the business effectively, thus improving the chances of having your business survive through the market amidst competition. A business plan clearly outlines what the business is, who does what, and who is responsible for what? This makes management easy since accountability has to match with the responsibility, for example, knowing that the account controls finances. So they are responsible and accountable for anything regarding finances. This becomes friendly for the top management to question who did or didn’t do what.

4. Raise finances for the business

The growth of your business requires a bit of adequate funding. Therefore, a business plan helps you budget and know how much you need. Additionally, it helps you identify viable funding sources if your prior arrangements are not enough to fund the entire budget. Some of the sources of funding that can help you gather and mobilize resources for your business could be short-term loans or borrowings from people or any other opportunities that could be available at your door.

5. Aids in setting smart objectives

As earlier said, a business without a plan is never a business; a plan gives a mind of what has to be done and what you must achieve in a certain period; thus this can’t be achieved without a way to get there. A business plan helps you set objectives and guide you on how you must work upon them to achieve them. If you want your business to pass highly, you have to set smart objectives that must be specific, measurable, achievable, realistic and time-bound.

What should you include in your business plan?

1. An executive summary

The executive summary gives an overall outlay of the business; this includes what you do, how you do it, location details, mission, vision, deliverables of the company, and a lot more information concerning the company. Generally, the executive summary is a document that gives a brief highlight of the information included in the entire detailed document (business plan). It is advisable to have a pitching executive summary because it’s what interested investors consider first, and when they find it interesting, they go ahead to ask for a detailed plan and financial budget of the business; therefore, when you are drafting an executive summary, you have to be kin because that is where people pick interest first. Therefore, it is advisable to do it at last when everything else has been done so that you don’t have to forget some of the aspects that you could have included in the body and more so it needs quite a bit of organization which calls for adequate time so that you can have an outstanding and classic summary.

2. Business overview and description

This is just a short statement mostly put on the first pages of the document; this may include the company name, what you do as a business, or maybe a tagline that gives a full description and an overview of the entire profile.

3. Development of Products and services (problem statement and solution)

By the time you plan to have a business in a place, you have identified a gap that needs to be filled which is the problem statement. So, you can highlight the problem statement and the solution you are providing.

4. Operations plan and management

Here, we look at how you will produce the products or services and the means of production a company will use; labor intensive or capital intensive technology. This part also includes the running and management of the business. Suppose you are to achieve your business goals; you have to consider looking for a motivated team with great selling ideas because your employees are one of the biggest determinants for the success of your business journey. For example, you might have an excellent business idea that would get traffic on the market. Still, if you have a bad team that is not motivated to achieve, trust me, your company or business won’t reach the heights you expected, but rather it will have stunted growth.

5. Target customers and competitor analysis

After identifying the problem and tabling the solution, you have to know the people your solution will help. Find out whether the area where you are going to set your solution (business) is ideal, conduct a good check to see if there are clients and whether they are actually the right people you are targeting, and understand their tastes and preferences, age, then when, where and how you can get to them.

Regarding competition, You will rarely have something new (business) and unique under the sun. So most of the time, people start businesses already in existence or have been done by others.

6. Marketing strategies

Assuming that you now well know who your customers and competitors are; it’s good always to do a market survey and find out what your competitors are doing in the market and how they are doing it so that when you are to implement or bring your product on the market, you have included all the bits that would put you ahead of the competition. Then, come up with excellent marketing strategies depending on how well you know your clients.

7. Budget/ financial plan (business financial summary)

You have to talk about the projected amount of capital you might need to get started with this. This should include rent, salary, allowances for workers, water bills, electricity bills, cost of raw materials, and all the other expenses that you think you are likely to incur. Then, you can also include the projected profits and losses and the funding requirements.

8. Achievements and progress

This is vital for any business plan; many times, people are actually interested in seeing the progress you have made regarding your plans. If they are to support, at least, there is something feasible they can see compared to simply presenting a document without a backup.

In conclusion, a business plan is not just a requirement for anyone hoping to start a business, but rather it’s a must-have, especially with startups.

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