Business plan is a formal written document that contains your prospective business goal. Business loan includes the process on how to execute these plans, the time period in which the goals have to be attained or executed. The plan consist a list of details which helps a business to achieve certain goals that helps them grow. Plans for attaining business loans also contain the following details:
- Nature of the business
- Background and financial flexibility of the enterprise or business
- All the strategies, business or company wants to undertake to achieve their target
- It works as a road map which provides a direction to the business
- Banks often require a documented business plan to sanction business plan or other kind of financial requirements
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Components of a Business Plan
The process of making a good business plan requires the company or firm to stick to a particular structure or template used to make or draft business plans. Well written business plan includes the following:
- Cover page with complete index
- Pitch summary
- The motto or vision statement
- Brief description of the business
- Analysis of the business environment
- SWOT analysis
- Industry background
- Analysis of the competitors
- Market analysis
- Marketing plans
- Operational plans
- Management summary
- Financial planning
- Recent company’s success stories
How to write a Business Plan to Start Your own Business?
How to start a business plan has always been a confusing topic for many firms and organisations. Creating a perfect business plan can prove beneficial for the growth of the firm or business. Creating a business plan involves a lot of research and detailed process which include a lot of stages some of which overlap each other or are inter related. It doesn’t matter if you are drafting a business plan from scratch or a predefined template or working with a business plan writer or consultant, you will find these steps along the way:
- Research: Detailed research includes digging out information about customers, competitors, and a detailed report about working capital cost of the business. A variety of methods can be used to find the following data; the data can be extracted from a variety of methods ranging from articles and data bases to even arranging interviews with other entrepreneurs or even potential customers. Research has to be organised and documented carefully with all the information gathered. The source of the information is to be documented along with the information, as the source has to be mentioned within the business plan
- Strategizing: The information that has been collected has to be used relevantly to support your business plan. Revise the business strategy you planned according to the information gathered. Your research has to be in-depth and precise so that your strategy can provide support to your decision on appropriate marketing, operations of the business or the firm. The rate at which the company shall hire for five years has to be mentioned. Strategy usually pulls the best out the practises present in the current marketing scenario. The companies use this as a base to build a plan in which different activities are added that gives the business a competitive advantage
- Calculation: All the activities and improvement comes at a cost and will generate some revenue from the strategy. The strategy has to be made with the cost of execution and the profits in the long. The strategy has to be on the basis that the profit would cover up the expenses. Start inserting your start-up cost and financial assumptions into a financial model which will provide you with an overview on the flow of cash in the first financial year, this will give an estimate on the funds the business will need on hand to fund the early operations
- Draft: With the strategy more or less decided and an estimate of the provided it is time to draft a business plan. With all the research and the calculations done properly the drafting work is the easiest in the creation of a business plan. If there is a problem in putting forward a convincing prose then this might be the right time to consult or seek the help of a business plan writer who can put together the business plan
- Revision and proofreading: Revising the entire business plan will ensure that you haven’t missed any idea or strategy that was to be added while drafting the business plan. Check whether the words in the business plans do not lead to any confusion. Repetitive, irrelevant or redundant points should be removed or substituted with better ideas that suits the points in the business plan. Finally go through the business plan to find grammatical errors, spelling mistakes and formatting
Types of Business Plans
There are two types of business plans as mentioned below:
A) Internally focused business plan
B) Externally focused business plan
Let’s discuss about these two types in detail.
1. Internally Focused Business Plan
It is a business plan which focuses on the internally focused business targets, intermediate goals which help an organisation to reach their externally focused business plans. An internally focused business plan may contain details like a new service that has been added in the business, a line of new products that the company is going to launch, the restructures in the financial matters of the company, setting up of a new IT system or even the restructuring or renovation of the business or the company. It usually contains a list of recent success the company has achieved.
2. Externally Focused Business Plan
Externally focused business plans which contain detailed information about the organisation or the company or the efforts made by a team to reach their goals. It also contains various list of profit entities, it includes a list of external stakeholders which include investors and customers of the company.
There are different types of externally focused business plans which have different stakeholders, investors and customers. The various types of externally focused business plan are as follows:
- Non-profit based: the external stakeholders are clients and donors
- Profit based: external stakeholders are investors and customers
- Government agencies: external stakeholders are the higher level government bodies, taxpayers, or the international lending bodies. The international lending bodies include international monetary funds, the World Bank and development banks.
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Ques. What are the questions that are answered by a perfect business plan?
Ans. The questions are as follows;
- What makes you different?
- How is your business going to make money?
- What are the ways to promote your business?
- What is the amount of funds required to get started?
- What is the expected time period to cover your investments?
Ques. How long should be a business plan?
Ans. A business plan can be anywhere near 10 to 100 pages; it always depends on the purpose of the business plan.
Ques. Is it mandatory to write a business plan?
Ans. In case you are interested in taking business loan from a financial institution, then it becomes essential to write a business plan as it is required by lenders before sanctioning any loan.
Ques. Who should write my business plan?
Ans. It is your business so the plan also needs to be written by you ‘the entrepreneur’.
Ques. What are the common mistakes in writing a business plan?
Ans. There are some of the common mistakes in writing a business plan that include ignoring the competition in the entering market, copying an exact plan of someone else, being over optimistic, relying on limited customers, applying too many ideas, etc.
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