What is a Business Plan?
A business plan is a written document outlining what you plan to do as a business and how you plan to do it, in a concise way. A business plan can be short and sweet, or long and very informative. A short business plan is titled a lean business plan
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What is the Purpose of a Business Plan?
There are many purposes of a business plan but the most important one is to provide information about your company’s goals and objectives while starting a business. This information is important to many people associated with the company like employees, investors, vendors, and customers. Other reasons to create a business plan include:
- Committing to a roadmap for your company
- Summarise what success looks like
- Highlight corporate socially responsible activities
- The future plans of the company
How to do a Business Plan?
Before writing a business plan it is important to do research so that you create an accurate depiction of the future of your business. Get to know your competitors and identify your USP. Before creating your first draft take into account who will be reading it. If the document is for external use make sure to exclude sensitive information that competitors can leverage.
Next, you can set about creating your first draft of your business plan. The basic outline of one is:
- Executive Summary
- Company Summary
- Market Strategies
- Operations and Management
- Competitive Analysis
- Financial Plan
Although the outline is straight forward you might not write everything in a linear fashion. Sometimes it is easier to write the executive summary last as it acts as a summary to the whole document. A company summary can be the easiest place to start as it can be brief and not so difficult to write.
Once the document is finished it is important to have someone proof it who has not been part of the creation so that they can identify mistakes and ask the hard questions in parts.
Why is a Business Plan Important to a Business?
A business plan provides insights into a business at any stage of a company’s lifecycle.
- A startup’s business plan is important for investors and employees alike as it highlights the future of the company, if it survives, and can be a deciding factor when choosing to finance or work for such a risky business.
- A small to medium-sized company can use a business plan to let their customers know that business is going well and what to expect from them in the coming years. This can help instill trust with customers and lead to more repeat sales.
- For larger companies, especially publicly trading companies, a business plan can be the reason why people choose to invest in stocks for the company, or not. If a business plan is not strategized correctly for this market, businesses may find their stock devalued and lose more than a few customers.