Do you own a business or are planning to own one? Well in both cases do you know what is the first thing you should do? A business plan! It is an important tool that will help you to make decisions. It is a roadmap to success. In this article, we will discuss why a business plan is important and how to make one. So, stay with us till the very end.
What is a Business Plan?
From a small business to an enterprise, each company needs a business plan. It is an important tool that guides them to make wise decisions.
In simple words, it is a formal written document that contains the goal of the business process. It contains all about the business including the nature of the business, background, financial plans, strategies, marketing analysis, customer segmentation, etc.
Key components of a business plan:
- Executive Summary
- Company Description
- Market Description, Opportunity, and Industrial research
- Competitor Research
- Products and Service
- Customer Research
- Marketing Plan
- Operational Plan
- Financial Plan
- Appendix
Importance of Business Plan
A business plan is an important tool as it provides an entrepreneur a clear vision of his goal and provides a clear layout to fulfill his goal. Also, it helps them to track the progress of the year and make necessary changes in it. Here are some reasons why do you need a business plan:
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Take Critical Decision
A business plan can help you to take any critical decisions for your business. Why? As it will provide you with a clear insight into your business.
Entrepreneurs are always busy making important decisions for their precious businesses and working with crisis management. They cannot afford to waste time to see major components of the business before taking any important decisions. With the help of a business plan, which is one of the business requirements, they will be able to make fast and wise decisions.
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Identify Problems
A business plan often gives you a clear vision of your plan. While businesses are often created out of passion, a business plan forces an entrepreneur to stick to a realistic approach for the business. With the help of this, you can identify the real challenges and obstacles in your path and look for solutions to them.
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Allocate Resources
Allocating resources is an important part of your business. With the help of a business plan, you can organize your resources in a way to maximize profit and reduce operational costs.
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Approach Investors and Apply for Bank Loans
For every business, investors are their backbone. A business plan can help you to impress your investors and win their support. Moreover, if you are looking for a loan then it can help you to gain the confidence of the bank managers.
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Set Milestones
A business plan lays out the milestone to be achieved in a year. It can lay out targets for short, mid, and long terms. These goals give you the strength to make changes and take decisions to meet them. Moreover, at the end of the period, it will act as a benchmark to understand what were the mistakes.
How To Make A Traditional Business Plan?
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Executive Summary
A brief description of product and services, market, capital investment, and team.
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Company Description
This part contains what a business does.
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Market Description, Opportunity, and Industrial research
This part contains information about your market industry and growth opportunity.
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Competitor Research
As the name suggests this section contains all about competitors.
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Products and Service
This section includes the description of the products and services you provide.
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Customer Research
This section contains real-time research about the customer’s demographic features.
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Marketing Plan
This section contains your current market decisions and plans. The four important elements of the marketing plan are price, product, promotion, and place.
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Operational Plan
This section includes National steps that you will need to take to achieve your targets.
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Financial Plan
This section includes all about finance for the long and short term.
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Appendix
This contains terms used in business plans for reference.
Business Canvas Model
While a business plan is good for looking for investors, a business canvas model gives a clear vision of values.
Business Canvas model is a one-page tool to describe strategic management policies and details to launch a new business or reorganize an existing one.
Here is a template to look how a Business Canvas Model looks like:
| Key Partners | Key Activities | Value Propositions | Customer Relationships | Customer Segments |
| Key Resources | Channels | |||
| Cost Structure | Revenue Streams | |||
It has nine important segments:
Infrastructure
# Key Partnership: This session includes things that a company needs not to focus on for better and optimize its operations.
# Key Activities: This section includes important activities to achieve a value proposition for customers.
# Key Resource: This includes resources that are important for a business to sustain and operate.
Offerings
# Value Proposition: This session includes products, values, and services that a business offers to its customers. (what is the aim of the company and promises for its customers)
Customers
# Customer Relationship: To ensure better customer reach, the company decides how to interact with customers and their relationships. (how to provide better customer supports)
# Channels: Through channels businesses come in contact with their customers and deliver their value proposition to them. (how to choose an effective market strategy)
# Customer segment: this section includes information about the customers. This business identifies its customers. (Who are the customers?)
Finance
# Cost Structure: This session includes cost expenditures under several business models. (Manufacturer cost, service costs and its relation with revenue)
# Revenue Streams: This includes the methods of how a business transforms its business proposition into profit. (How to make profits)
Conclusion
I hope you found this article helpful. Do share your thoughts in the comment section below.
