Business plan is a document created to help the owners of the business outline how they intend to operate their day to day business activities. It is a business guide and communication tool. It tells investors, bankers and sponsors how resources could be put into a business.
A business plan has a quality of living long after it has been created. It is a living document that could be changed and evolves along with the business.It clearly communicate what the business operator intend to do how to achieve it and sets acts milestone to measure performance has Tom Harris put it in his book.A practical guide to starting and running a new business, springer (2006)
It is a financial model created by a team or a group of individuals with a common objectives and goals but someone has to take charge of its production.A business plan is essential tool and on going reading as business develops. It has no qualities of remaining static. Changes are made as business discloses its operations.It is ever updated often as knowledge of market expanding.Its ownership remains a property of a whole team.
Reasons for writing a business plan
- To serve has a tool for communicating ones ideas to others e.g. investors, partners or employees.
- To be a tool for guiding business operation
- It forms a foundation for financing proposals.
- Allows assessing and measuring of performance as business progress.
- To serve as a guiding tool in setting short and long term business goals.
- For identification of strength and weaknesses of the idea.
- For ease evaluation feasibility of business idea.
Content of a business plan
No strict rules on what the content should certain. What is essential is telling, the best and logical, step by step of ideas in your business plan. Let the story flow logically and lead your audience naturally to conclusions. Hit the nail on the head and never imitate the meandering of a river in communicating or giving your side of the coin. Remember readers of your business are good time managers. They feel good when they get know what you want them to know quickly.
Thinking of the market of your products
Customers are your market. Think what problem they are facing. Find the solution to that problem, which is your business idea. The reason why customers pay you is a solution to their problem not because you have to something to sell but you are solving their main problem. That is making goods and services available for them to buy. Take examples of banking services in an area that produces a cash crop for instance, if you propose banking services to that place automatically you will get clients.
Organizing your thoughts
There are many ways of presenting a business plan. Make sure you choose the simplest to avoid confusion. Be smart enough to tell your customer, that is the readers of your business plan, exactly what they want to hear not what you know, or you do not know, they do not have time for your beating g around the bush. Be precise in your giving the details of your business plan.
The most important is telling or remaining them the main problem and immediately give the solution and the lasting cost. Of course you can’t win hearts of many but a good percent will believe in you. Never waste time on doubting Thomas but do waste on serving the buyers of your product because they are the ones that make the mantle of your business alive. Put your ideas clearly on writing, assess the whole project and thoroughly do research on the needs of your client. It includes talking to them in person or employing an expert to help you answer all the questions you need to complete your plan.
How to raising capital
One can finance his business from his own savings, a loan from financial institution or investors or share holders. The plan should demonstrate clearly all aspects of the proposed business. The most important is to know exactly how much is required, and for what. It helps to assure investors that their funds are well used. Planning will not only help you in the money borrowed but even in planning and utilizing your own money wisely.
How to monitor your business progress
- The business plan gives the owner the direction where his/her business should be moving.
- Never say you are on the right track just because you have a plan and you are working.
- Business plan is not a certificate to success but a guide to business throughout its operations.
- Business progress should be reviewed always at a regular interval. It can be weakly, monthly, yearly or a period up to 2 years to some people.
It is essential to know how your business is doing. In case it fails to meet the targets, one is in a position to workout remedies before it is too late. It’s also easy to identify areas you need to work hard on as a business owner. Improvement can be made to return and lure new customers to buy from the business.
Customers are pride of your business and your products are your burden. It is only the buyer who can help to relief you by buying it. Business is like a river that flows. If you stop water from flowing, the river may burst break its banks and causes a disaster that is flood. If your goods and services are not moving it is a problem to you and your business. It will be a great lose, and the bank might sell or auction business to recover borrowed loan.
How to protect your idea
After establishing the market research and coming up with your business idea, then think of protecting it. This is because the world we live in is unfair. One can take his or her time,money and energy to grow crops and a thief comes and harvest it easily. You need to protect your ideas; by registering with right institution.
One has to make sure that he/ she has not coddle someone’s else rights as well protecting his own right, by investigating the intellectual property rights. Disclosing your ideas and business secret will cost your business potential.
What are intellectual property rights?
- It refers to creation of something originally out of one mind. This can be invention, literary work, artistic work, designs, symbols, images, and names used in trade. It can be
By protecting intellectual rights, the law enables creators to recognition or financial benefits from what they have created.
According to trade organization, intellectual property rights are the rights given to persons over the evocation of their minds. It provides the creator rights over the use of his/her evasion to a certain period of time.
Intellectual property rights can be divided into two types.
- a) Registered rights
- Industrial designs
- Registered trade mark
This differs from country to country, but it requires on applying for it. Concerned institution will scrutinize it to ensure its novelty and applicability before granting it or certifying it. The truth is a fee is paid at the application stages and throughout protection period.
- b) Unregistered rights.
It includes -:
- Common law trade mark
- Resigns rights
- Trade secrets
Trade secrets for example cola recede is not a right but the company can sue anybody people who uses cola patent to produce drinks. The company cannot stop someone from making and selling drinks using the recipe as he would be in the public domain.
Types of businesses
One can start up a business as:-
- A sole trader
- Share on liability company
- Holding company
For one to start up a business she / he need to register with the state. If it is accompany there must be a company constitution that defines well the memorandum and articles of association.
Marketing your products
After exploring your potentials,of an idea and establishing your business, set up facilities. For example buildings, cars, plants, employees, and all that is required to start up a business, your next immediate thing is the market and selling your products.
Harris. T . Defines marketing as:The strategies employed across the entire process of designing your offering to meet the needs of the customers you want to sell to and the mechanisms by which you promote it and finally deliver it to their satisfaction. For simplicity, you can say it is packaging of products intended to a targeted customers or customers. These products can be informed of goods and service.
A business plan layout
There are not strict rules on how the layout and structure for business plan documents should be. Some aspects are desirable and others optional. The most important is the best sets of signposts that tell the story of your business immediately and clearly to the readers of the documents. The readers should be told the story naturally and logically and be lead through assumptions to conclusion with ease.
A business plan should contain
- Executive summary
- Products or services
- The market segments
- The management team
- The business operations
- The financial requirements
- Financial projects
The market segments
- Set out your real commercial opportunities you have identified
- Beginning business do not have sales records therefore describes the clearly what you expect the condition of the market would be.
- How you would be different from already existing businesses.
- Tell customers the problem that exist and how your company tend to solve
- Give proper definition of market in terms of- size
- Clearly describe the customers groupings you identified
- Set out scale of opportunity
- Describes inducting-characteristics and how you will compete.
- Identify the main barriers to new extent to the industry.
The products or services
- Provide solutions to our customers problem in clear language
- Be careful not to over-type your description
- Emphasize your unique selling points
- Clarify competitive edge you expect to succeed in
- State what you’re offering to maintain and attract customers.
- Explain what intellectual right that exist and secured already
- Describe you pricing strategy and how it costs you to make and provide offering.
- Tell what you do to change it.
- Describe anticipated costs and earning.
The management team
It includes descriptions of entire team and their qualification and experiences. This is so because it will convince readers that you have right team to convert the plan to be a reality. Give qualification of both the board of directors and the executive.
The financial requirements
This is a punch line. It should tell the story in few words. Explain and present properly the required financial capacity and capability and what you need to achieve the goals you stated.
It should explain how you intend to fund you business. Is it through?
- Invest in stages or loan sum
The executive summary
- It is the last to be written though it is the first part in the plan layout
- It determines whether the entire document worth reading
- It is normally one page minimum and 2 pages maximum. The executive summary need o be realistic and powerfully persuasive. It should stand alone sales and hyperbole type of language should be avoided. Any communication be done in plain language
Preparing business plan
- A business be readable in it presentation. Avoid jargon and explain clearly technical terms.
- Keeping in mind the people you writing a plan for and do what they want to know.
- What do you want them to do and also consider language they understood better
- Using colors and photography’s is important. Show pictures and diagrams. People understand quickly and interrupt easily than pages of words. It presents the image behind the words. A picture is equal to pages of a thousand words.
- The numbers of products and values should be punctuated with commas or rounded to the nearest decimal for clarity. For example 1000000. It can clearly be read 1,000,000 or 1 million. For start up companies the business plan should be 10 to 15 pages long.
- It should be free from errors and be professionally presented.
- Do not show readers that you had money to waste in design and decorating plans hard cover. Just be simple, competent and professional. What people want from you is not how many degrees or how learned you are but what can you give right away.
How to make business presentation
Before you make a presentation it is advisable to find out how much time available for presentation. Be concise in your presentation because that is what people appreciate. Some of the audiences are busy people. Bore them and you will not be impressed at all.
Do practice before presentation. Make sure you mastered the materials properly. Learn them by heart and have them on your finger tips. It is good you get prepared in advance. Use Prompt cards if possible or power point. Look at them occasionally as you present. Do not read word by word from the scripts. That will show how little you know about your products.
Good presentation should involve up to three persons taking turns in talks. A void many and crowding in your presentation and be ready for question from the audiences. Winning their confidence to fund your business is your business and must show them the whole content within a short time possible.
If you have made products sample make sure you hand it to the audience to feel, see, small, taste and hear its sound. They are likely to appreciate it than abstracts description.
If audience asks question in middle of your presentation, that means they are interested, you can answer them briefly. Telling them to wait till the end will put them off. Early inquiry is better, to know whether projectors and other facilities available to enhance your presentation. If not arrange appropriate and locally available facilities for your presentation.
The role of your team
Despite attractiveness of the market and brilliance of ideas, well written and presented business plan, investors will belief you if you involve professional. These professionals involved in the starting company or outsiders. Entrepreneurs feel secure when the teams behind your company are lawyers, accountants, doctors, bankers, business managers and administrator. Most important is curriculum vitae of any involved in the plan. Be straight to the point.
If you involve a former failure in your business plan it is like digging a grave for business. People involved should a well defined with success-track-records to win the hearts of investors.
Harris Tom says the teams’ needs a set of attributes including creativity, determination, ability to deliver and empathy for the customers’ needs.