Drawing up a business plan may be the most important step in creating a successful business. The phrase “business plan” must be a key part in every successful entrepreneur’s vocabulary.
A business plan comprises ideas and visions regarding justifications, projections, statistics that compare the current state of the business with the one you have planned for the next three or five years, or at least the desired state. A successful business plan must be a part of all the activities the entrepreneur undertakes. Moreover, it will not cease to be present in his/her mind, because it is a blueprint of the entire business.
So what makes a business plan great?
Simplicity. Simplicity is one of the most important attributes of a successful business plan. Whether we are talking about a family business or a business at a larger scale, the objective must be aimed perfectly towards the target. The needs of the firm must be on the right scale in the future business plan. The entrepreneur must have a good knowledge of the target market, understand the capital needs that are required, the budget, the cash-flow, and, most importantly, foresee the course of the business from the starting point to the desired one.
A micro-scale entrepreneur will not only want to expand his/her clientele, but also have a plan that is in accordance with this objective, that aims towards promotion, creating a website for example, or creating a professional relationship. The plan must be adapted to all these requirements.
Once the idea is put on paper and the objectives are set and discussed with the managerial team, the feasibility of the business must be taken into account. Ultimately, the goal of creating a business plan is to attract investors after only taking a glimpse of the plan.
If the entrepreneur does not have the necessary knowledge or experience to write it, he or she should hire a business consultant, because a professional business plan needs time and resources. A red flag for an unsuccessful business plan might be that, after reading several paragraphs, an investor may not find the main idea of the business to be clear and may not see how your business will differentiate itself from others.
After this explanatory note of the business, there should be an executive summary that describes the company, the purpose of the business, the way in which it will bring in profit, how the product or service will attract new clientele and what is the required amount of money to start up the business.
The market study is considered extremely important and its main purpose is to provide relevant information that will help you solve marketing problems that will come along the way. This is a necessary and important activity in the start-up phase: conducting detailed market analysis is the foundation of any successful business because the data you gather will be a determinant aspect in the decision making process.
The study must analyze the needs of the potential clients, answer questions regarding the size of the target market, the increase in the market register, the SWOT analysis, threats, business opportunities, thus underlining the value of the business proposition. All this information must be based on reliable data and sources and not on assumptions.
Despite the fact that most entrepreneurs are convinced that their idea is unique, they must not fall prey to this thought, but rather focus on studying their market and their competition: which barriers stand in the way of tapping the market, who are their competitor, what do they offer, what is their market share, what are their strengths and weaknesses, what strategies do they use.
A key aspect of a business plan is the team. First of all, one must come up with the team’s profile, the training, the experience, abilities and their accomplishments. The personnel, especially the managers, must be well prepared, capable of foreseeing certain problems and dealing with them swiftly and efficiently.
If the potential investors have read the plan thus far, this means that something has caught their attention. This is the moment when you will “knock their socks off” with well established details regarding the business such as the ones involving revenues and expenses, estimated sales, promotion, licenses, services, but also the fixed costs of the firm, the salaries, rent, movable assets and maintenance. It is of great importance that you comprise a preliminary list of all the justifications for each element that includes both the main suppliers and the distributors.
After considering all these aspects, one question lingers in the mind of the investor: what profit will this business bring in? And, more importantly, when will the company begin to bring in a profit, after how many years? That is why, a forecast for the next three years of the profit and loss account, the balance and the cash-flow are extremely important. In the long run, this analysis will present the means by which revenues will be able to cover the initial investment. For companies that are just taking their first steps into the business world, the cash-flow is essential.
A successful business plan must always be flexible enough to withstand and adapt to new changes. It cannot solely be written once, but rather be constantly improved. This aspect is considered extremely important since the market is continuously changing and evolving. The company may encounter unexpected problems or, quite the opposite, see opportunities that could change the business parameters. Once the process has started, an entrepreneur must constantly ask himself how the business could evolve and should keep analyzing the collected data.