How to write a professional business plan
A professional business plan is a detailed outline that explains an approach to a business’ operation. Business plans are written by the existing business owners/shareholders to help in the identification and development of their business operations. The business plan is also designed by prospective business owners to attract investors to fund a start-up business. Because the plans (strategic and business plans) are important documents in the business world, it’s likely that undergraduate and graduate students majoring in business will have to complete at least one business plan/strategic plan in the course of their studies.
Any company or starting business needs a business plan to record its mission and vision and give direction for the business performances. A business plan refers to a file that encompasses business strategies, goals and directives. Students at any educational level may be required by their instructors or teachers to develop good business plans to show their understanding of the business environment. It gives them insight on how to run successful businesses in the future. It must give a clear summary of the financial objectives, strategies and directives with apparent indications of the strengths, weaknesses, opportunities and threats.
As an important document for the success of a business, the plan must be developed with precision to ensure that it is followed faithfully by the parties involved. Students experience difficulties in writing comprehensive, feasible and coherent business plans because of their tight academic schedule.
Main contents of a business plan
A business plan includes certain essential elements. These elements are the overview of the business objectives and vision, a detailed description of the products and services offered, financial statements and strategies, an analytical aspect of the market situation, management team and strategy, and a detailed operational plan.
In a few paragraphs, the overview should explain the discussed objectives and strategies and the time frame for executing the plan. It should also include the types of clients that the company has secured and those that it targets.
The description of the services and products should entail vital information that would needed by the customers. The marketing analysis includes a preferable location for the business and a good advertising strategy, having conducted an extensive marketing survey. It is important to explain the business activities, which will be carried out once it is set up.
ROLE OF BUSINESS PLAN:
An entrepreneur, when having any idea of a business ,are afraid of writing the business plan fearing for the future. But a well documented plan provides unlimited benefits. It helps to define the in-depth analysis of the business and the strategies of how to venture with that business in the current market.
A plan written on paper not only helps in identifying the potential problem areas but also helps in working out the solutions without interfacing the real world consequences. It also helps in communicating goals throughout the organization.
If proper strategies are implemented then owners or the managers can use it as benchmark to assess the goals they have achieved and also to improve the areas of weakness. Hence it should not be limited to a start up tool but should be used continually to re-evaluate the progress of the business. Business plan does not guarantee success but helps in reducing probability of failure.
Apart from the above benefits, the most important role of business plan is to accomplish the vision of an entrepreneur by persuading the investors to fund them. The financiers could be either the lenders or investors.
To accomplish this an entrepreneur needs to formulate the plan in such a manner that it satisfies all the aspects which the investors look into.
The important aspects are listed below:
- Executive Summary:This section plays a critical role as its the first document which an investor looks and makes a quick decision on the proposals. It should be as concise as possible detailing all the important aspects of the business fulfilling the investors expectation.
- Product, history and competitors:The investor also looks into the following factors such as what is the product or service ,what pain is being eased through this product or service, history of the product, uniqueness of the product so that the customers are induced to purchase and who are the direct and potential competitors.
- Marketing analysis and plan: This is the critical part of the business plan as this not only helps the investors but also an entrepreneur to understand the market. The market analysis helps them to analyze what the market size is and what the future it holds for them and how they are going to target the market, what is the value proposition they are having and what strategies they are going to pursue to target those market.
- Management: Management summary is an important summary which an investors wants to look into it as they are the ones to whom investors invest their money. The investor knows that without the right people no unique opportunity can be turned into reality. Hence they give more emphasis on the quality of the management team.
- Financial plan:The financial aspects plays a critical role in the plan as it converts the other parts of the business such as the operations, marketing, management etc. into the expected financial aspect. Hence when providing financial projections one must highlight and explain the importance of the significant figures from the pro forma income statements such as revenue, operating profit, operating margin, net income and net margin over the period of 3 to 5 years. In addition to these statements it also shows the break even analysis, NPV and the cash flow statements.
- Risks: Risk is the uncertainty of the future and the investors wants to know the assessment of the level of risk. They want to know that if there is any risk such as operation risk, market risk, financial risk then how one plans to avoid it and also how to mitigate those risks.. Hence when formulating the plan one needs to take care of adding all the risks which are associated.
Business plan is basically the backbone of an entrepreneurial finance. Since some entrepreneur have difficulties in conveying their ideas to the investor, hence business plan becomes an important communication media to convey their ideas.
The business plan cannot guarantee the success of the business, if the entrepreneur does not have the necessary skill, knowledge and zeal to translate the plan into reality. While formulating a business plan, the entrepreneur must bear in mind about the government policies of the country.
How to write a good business plan
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