Why do many start-up businesses fail? Among the several reasons that may account for their failure, the lack of a business plan tops the list. Entrepreneurs who skip or rush through the planning phase eventually hit rock bottom. A business plan is of grave importance and should be prepared with utmost attention to detail, deliberation, and dedication.
What is a Business Plan?
A business plan is an official document that describes your business, organizational structure, industry, competition, products, services, financial and legal information, capital expenditure and budget plans, and your growth strategy. It serves as a guide for owners and leadership to define operating plans for the business. Meticulous business plans aid investors and financial institutions in making informed lending investment decisions.
Preparing a Business Plan
Preparing a business plan is a thorough exercise and requires hard work, research, and equal contribution of stakeholders involved. Approach a business plan with one segment at a time to ensure clarity and avoid confusion and conflicts.
Below are 11 steps for drafting the perfect business plan for your next venture:
1. Define Your Vision
Vision is the ‘why’ of your existence. Before taking your business plan to paper, be clear on what your business aims to achieve. Explain what problems you intend to solve from a broad perspective. A business vision is a definitive statement that will drive your strategy, decisions, and growth. Vision specifies your ultimate purpose and determines your mission and long- and short-term goals; it shapes management policies, leadership capabilities, culture, and values.
2. Know Your Audience
Conduct thorough research on your target audience. Analyze consumer buying behavior, purchasing patterns, the preferred mode of shopping and payment, and geographical and demographical data. Online available tools like Salesforce enable businesses to gain meaningful customer insights. Seek the professional services of an expert salesforce business analyst for a detailed consumer investigation. Consumer analytics will help you design unparalleled products and services.
3. Executive Summary
An executive summary defines your business plan in a nutshell. It is the crux of all the segments and provides a concise plan overview. The executive summary is the first page of the plan and can make or break your impression. It is advisable to prepare it at the end so that it highlights all major components. Investors, financial institutions, partners, and shareholders read the executive summary to understand your proposal.
4. Company Introduction
This document introduces your organization, company vision, leadership team, board members, products, services, and solutions. Include information about your registered business title, locations, spokesperson, and contact details. Also, add an organizational structure to show management hierarchy and levels. Talk about how you will add value to the industry.
5. Products, Services, and Solutions
Explain in detail your products, services, and solutions. Describe the problems your business aims to focus on and the existing market gap for solutions. Define how your business will benefit the customers and the value you will add. Be specific, clear, and concise in your description, as a vague explanation will impact the stakeholders negatively. Talk about similar products and services in the market and identify what they lack. Address the gaps and pitch your unique selling proposition to approach investors and lenders.
6. Industry and Competitive Analysis
In this section, explain the industry in which you want to establish the business. Talk about the industry size, saturation, existing market players, total market share, demand and supply situation, and consumer preferences. Include SWOT (strengths, weaknesses, opportunities, threats) analysis in this document and identify potential risks and chances of growth. Analyze your direct and indirect competitors offering similar or alternate products and services. Additionally, you can also include PEST (political, economic, social, technology) analysis to study macro-economic factors impacting the industry.
7. Marketing Plan
The marketing plan will include your complete marketing strategy. Explain your product and service features in terms of sizes, portions, and bundles offered. Next, talk about your pricing strategy and how you plan to fix the rates of your end product. The pricing should be market competitive yet in accordance with your customer purchase power. A marketing plan also contains locations where your products and services are physically available.
8. Sales & Distribution Plan
The sales and distribution plan talks about your placement strategy in detail. It contains the operational process of your sales, distribution, and logistics function. Address the complete route involved from the production facility to the end consumer. Discuss the players in the distribution channel, warehouses, wholesalers, retailers, and direct selling points.
9. Advertising Plan
Advertising is to inform your target audience about your products and services. If your end consumer is unaware of your existence, you will cease to make a sale. Explain your advertising strategy in this section. It will include branding and promotion, print, electronic, digital, and social media strategies. Talk about your partnerships with media houses, ad agencies, brand ambassadors, and celebrity endorsements. Align your advertising strategy to convey the same message across all platforms.
10 Finance and Budget Plan
In the finance section, explain details of financial assets, funds, resource allocation, capital and operational expenditure, liabilities, and investments. It will also contain your short and long-term budget, sales forecasts, profit margin, and vital financial metrics. Highlight your financial strengths and project your growth to attract investors and lenders. Additionally, Identify potential financial risks and propose viable solutions.
11. Legal Framework
This section will include essential data from the legal aspect. As an owner, you are liable to declare certain information to operate a business legally. Include type of business, owners’ information, registered legal counselors, copyrights, patents, trademarks, contracts, and applicable tax details. Businesses that share legal data are considered trustworthy and reliable.
Planning is the first step to starting a business. No business can survive a long time without a proper plan to guide it through. A well-documented and carefully prepared business plan will set the course of action for your success. It will win your stakeholders’ trust and attract meaningful partnerships and gainful investments.. Devote your time to producing a comprehensive business plan for your future entrepreneurial endeavors.