what is business plan?

what is business plan?

The Importance of a Business Plan

1. Introduction

The business plan is the blueprint for your business. You would not build a house without a blueprint, and a pilot wouldn’t fly an airplane without a flight schedule. A business is an entity, and it needs a precise roadmap to succeed. A well-constructed business plan will provide the organization with a clear direction, and a map to get there. In other words, it will define the organization.

The importance of a business plan has been a widely discussed topic. Having a well-thought out and well-executed business plan is crucial to not only your business’s success, but possibly its survival. There are many issues and elements that need to be addressed when creating your business plan. Through this essay, I will describe and give examples of each aspect of the business plan, and the benefits that can be reaped from a well-constructed plan.

2. Benefits of Having a Business Plan

The difference between successful businesses and those that fail is that successful businesses have planned for the future. They have thought ahead, made plans, and their plans have paid off. Business planning is vital to business success. A wealth of research shows that those businesses that plan and take the time to develop a plan for the future grow faster and are more profitable. The business plan will define your business, identify your goals, and serve as your company’s resume. It is the business plan that will detail exactly how you will run this company. A business plan provides a guideline to help you achieve your goals. Writing a business plan makes you define your business goals; this can be an exciting time for any business owner. It helps you to take an overall look at your business and the steps that you will take to achieve your business goals. A business plan is not only essential for seeking financing but also provides a reference tool for success. A well-written plan can provide you with a step-by-step outline of the process that you are aiming to achieve.

3. Key Components of a Business Plan

6. Financial projections: Every business plan should have a financial projection. This is a forecast of future sales, expenses, and ultimately profits. Compiled yearly, cash flow forecasts show where a business might need to borrow and when loan repayments might be required.

5. Marketing and sales strategies: It’s always important to know who your target market is. Knowing this enables you to design your marketing plan and project a suitable image to present to your market.

4. Organization and management: Every business is structured differently. This section of your business plan will include an overview of your organizational structure, descriptions of the roles and responsibilities of your management team, and your employee recruitment and training plan.

3. Market analysis: Before launching your business, it is essential for you to research your business industry, market, and competitors.

2. Company description: The company description provides information on what you do, what differentiates your business from others, and the markets your business serves.

1. Executive summary: Your executive summary is a snapshot of your business plan as a whole and touches on your company profile and goals.

A business plan may vary in length and scope depending on the nature of the business. However, all plans usually contain the following key components:

4. Steps to Creating an Effective Business Plan

Set your goals and track your progress. Do your research – you will need to make quite a few decisions about your business including structure, marketing strategies, and finances before you can complete your plan. Determine who your plan is for. Does it have multiple audiences? Make sure you’re pitching to the decision-maker and tailor your plan accordingly. Writing to the needs of your audience will increase the chances of getting the outcome you desire. Start with a pitch to gain interest. If the reader is not engaged by the end of the first page, they are unlikely to read on. Simplicity is the key, make it easy to read and understand. Under each point asked for in the plan, use bullet points. This will make it easier for you and increase the chances of the point not being overlooked. This is a plan for your business, so write it yourself. It is far more effective this way.

5. Conclusion

The business plan is gaining a fresh lease of life in light of recent events. The business plan helps a firm assess its market opportunity, clearly identify its target market, assess the strength and soundness of a business opportunity, and identify the resources required to be successful. Effective opportunity assessment is an absolute requirement for high growth ventures. In a study of some 300 high growth ventures, HBS Professor Tim Noakes identified “adequate searching and information gathering on markets, competitors, technology availability” and the like to be an important part of all four of the phases in his model of “Managing the early growth of your firm”. Planning should be continuous and ongoing. High growth ventures typically revise their plans monthly or quarterly to incorporate new knowledge gained through experience and relentless questioning of assumptions. In summary, the business opportunity assessment and planning activities covered in this paper are crucial for high growth, technology-driven, start-up firms.