A recent study founded that the most successful businesses were those who wrote their business plan between the 6 to 12 months of having the first thought about starting a business. Yes, a structured plan to how you plan to start and grow your business, is key for a business. So, “What is a business plan?”
But before we answer your questions, “What is the purpose of a business plan?” or “How to make a sound business plan?”, first, let us tell you, what is a business plan?
Most business fall under the category of a traditional business plan which includes a detailed overview of the business’s different aspects. This plan is often distinguished from the lean start-up business plan which is faster to make containing key elements only.
Let us make it easier for you by breaking down the business plan definition:
Detailed: A business plan is a written document that shared a detailed executive summary of business activities, objectives, and how it plans to achieve its goals. We have discussed what does a business plan include briefly below.
Multiple Departments: It lays out a written roadmap for all key areas in a firm including from a marketing, financial, and operational perspective.
For Others: this document will not only allow you to ask yourself questions about your success rate but will also be helpful to put forward while securing an investment or client going forward. Hence, it should be presentable along with being precise.
From precise, we mean in terms of numbers because if you were to ask us,
Let us inform you that this document will turn your business into a successful one by attracting investment before a company has even established a proven track record. Yes, a business plan is your key to unlock investments especially from banks, angel investors, angel groups, and accelerators, amidst the various types of investors for start-ups.
Varying Length: Continuing the definition of a business plan, we have varying length of a business plan. Yes, a business plan can be made lengthier or shorter for traditional business and lean start-up business respectively. A business plan can range from 20 to 50 pages containing various detailed overviews of topics from the executive summary to the financial plan.
What does a business plan include?
This is the format you can use to create a traditional business plan.
Before introducing “What you are selling?”, you must sum up what you are going to present to the audience or readers of your business plans. The executive summary is a concise overview highlighting key points that are detailed in the business plan and this can also vary from one to four pages. This should stand and hold value as a separate document.
This will be showcasing details of your brand’s work. Since, the business overview is one of the most essential parts of the business plan, here’s “How you can write a business overview?”
The legal structure: This includes the common legal business forms which are sole proprietorship, partnership, corporation, and S corporation. A Limited Liability Company (LLC) is a business structure allowed by state statute.
Business formation history: What makes your company unique and you a visionary, is your company formation history.
Location: Under this category, you can mention where your business is headquartered and other locations the business owns.
Market Analysis: While you will be mentioning how incepted your business in “Business Overview” and it can be affected from an emotional front in some ways, market analysis is what will make you attract the investors. Yes, umbers attract numbers and that’s true in this case. Here, your research should be relevant, valid, and presented well to ensure that you get the investors.
This chapter of the company overview is most crucial and essential as products manufactured or sold or the services rendered. Classify the different types of products and services and offer the nitty-gritty details of your business. This serves the purpose of a business plan.
You can save the numbers for later in your business plan while you can now you can go ahead and give the reader a general understanding of your business, your product or service, and your customer. If they’re interested to know more, they’ll reach out to you for a meeting or take the time to rest of your business plan.
You can outline pricing and sales information and also include rationalizations for why your audience will buy your products or services and how you will reach them through marketing and advertising efforts.
This implies that you can assess and analyse the comparative strength and weakness of competitors which includes their current and potential product and service development and marketing strategies.
Break down who owns your business and how each owner is involved with the business. What shares of the company belong to whom? If you have a highly involved management team, share their names and key roles with the company as well.
The financial plan will allow you to express in numbers what your business is. The revenue and start-up expenses along with cash flow projection.
Knowledge about the above crucial aspects of a business serves the purpose of a business plan.
Business Continuity Plan (BCP) outlines how a business will continue to operate the business in case of an unplanned service disruption. Recently Business Continuity Plan is viewed in the light of Covid-19 as it is more comprehensive than a disaster recovery plan and more relevant in today’s day and age.
These are the key elements of a Business Continuity Plan:
It is a checklist of supplies and equipment, data backups and backup site locations.
The plan should be inclusive of contact details of the emergency responders, key personnel and backup site providers.
This document may provide detailed strategies on how the business will continue to operate for short-term and long-term outages.
BCP profiles strategies for handling IT disruptions to networks, servers, personal computers and mobile devices.
The process of re-establishing office productivity and enterprise software which is needed to ensure seamless business operations should also be mentioned in the plan.