Business Plan Preparation

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A business plan is a description of the future of your business, it tells you what you intend to do with what resources. It is a document that is describing your future actions. bp2

Why would you need a business plan ?

There are several sources for your business plan , each highlighting certain aspects of a business more than other. All approaches for a business plan follow the same red line that we would show later on.

So why would you need a business plan ? The answer is quite easy and there are several reasons for needing a business plan; the most important reasons are :

  • a business plan is a tool for understanding your business. You can track and follow up the actual vs. planned of your business by understanding what your business planing assumptions have been and how those have evolved
  • it can be a tool for attracting financing for your business from investors. Investors want to understand your vision and plans for your business, they want to assess the potential risk for their investments
  • it is a sales and recruiting tool for your business. Your business plan supports your sales actions, you can monitor and determine your efforts with regards to sales. When trying to recruit staff it is important to “sell” your vision to the targeted employees. It is somehow similar to attracting investors, here you need the skills, abilities and work of “an other type of investors” like your employees

It is important before you start developing your business plan that you have a pretty clear image about your goals and objectives, you should have a clear vision about your business strategy. You should have also a clear picture about your long term growth that should be the guiding principle of your solid and consistent business planning.

 

Business plan – generic structure

bp3According to Entrepreneur.com a good business plan follows generally accepted guidelines for both form and content. There are three primary parts to a business plan:

  • The first is the business concept, where you discuss the industry, your business structure, your particular product or service, and how you plan to make your business a success.
  • The second is the marketplace section, in which you describe and analyse potential customers: who and where they are, what makes them buy and so on. Here, you also describe the competition and how you’ll position yourself to beat it.
  • Finally, the financial section contains your income and cash flow statement, balance sheet and other financial ratios, such as break-even analyses. This part may require help from your accountant and a good spreadsheet software program.

Breaking these three major sections down even further, a business plan consists of seven key components:

  • Executive summary
  • Business description
  • Market strategies
  • Competitive analysis
  • Design and development plan
  • Operations and management plan
  • Financial factors

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Regardless of the approach taken for your business plan the periodical update and adjustment is critical to evaluate your progress and achievements. From time to time it is important that you revise your assumptions, milestones, business results and make the needed adjustments. The operational analysis alignment to strategy is important and critical to evaluate your progress and achievements.

Whatever you do do not over plan your business, it is an useful tool but it is not the purpose of your business. Tim Berry stated in his article “It’s a biz plan, not a doctoral thesis!“.  Do not make your business plan the purpose of your endeavour, especially when we’re talking about a start-up, you should adjust the content and dimensions of your plan to your actual business needs.

Your business plan is actually the documents about certain answers to a lot of questions that you have to have answers. What kind of questions and what questions can be found in an interesting article on Entrepreneur.com

Some of the questions might be surprising and not expected, a business venture will change your life and life style and therefore you need a clear picture of what you would expect.

Top Ten Do’s and Don’ts

THE TOP TEN DO’S

  1. Prepare a complete business plan for any business you are considering.
  2. Use the business plan templates furnished in each session.
  3. Complete sections of your business plan as you proceed through the course.
  4. Research (use search engines) to find business plans that are available on the Internet.
  5. Package your business plan in an attractive kit as a selling tool.
  6. Submit your business plan to experts in your intended business for their advice.
  7. Spell out your strategies on how you intend to handle adversities.
  8. Spell out the strengths and weaknesses of your management team.
  9. Include a monthly one-year cash flow projection.
  10. Freely and frequently modify your business plans to account for changing conditions.

THE TOP TEN DON’TS

  1. Be optimistic (on the high side) in estimating future sales.
  2. Be optimistic (on the low side) in estimating future costs.
  3. Disregard or discount weaknesses in your plan. Spell them out.
  4. Stress long-term projections. Better to focus on projections for your first year.
  5. Depend entirely on the uniqueness of your business or the success of an invention.
  6. Project yourself as someone you’re not. Be brutally realistic.
  7. Be everything to everybody. Highly focused specialists usually do best.
  8. Proceed without adequate financial and accounting know-how.
  9. Base your business plan on a wonderful concept. Test it first.
  10. Pursue a business not substantiated by your business plan analysis.

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Do your homework before you find yourself head first in an business venture, do your business plan properly , see if it makes sense and if the returns match your expectations.

A business plan can be a very good helpful tool done properly but it will not help you whatsoever if done superficially.

Further some links to business plan topics here and here.

TopCFO is glad to support you with your business plan . Get in touch with us to start the first step towards a TOP business plan.

You can follow us on Linkedin,Twitter, Facebook

 

 

 

 

Reference

[1] https://www.entrepreneur.com/article/38290#sec2

[2] https://www.scu.edu/mobi/business-courses/starting-a-business/session-2-the-business-plan/

 

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