| |
Components of a Business Plan
Starting or expanding an existing Business always involves a certain level of risk. It could be said that the only guarantee is RISK itself. With such a tough economy it’s absolutely vital that anyone who’s considering starting or expanding any kind of business should first prepare a business plan.
All businesses at some point started off as an idea and developed from there. Some were successful and most failed.
Ask any financial advisor about starting or expanding a business and they will certainly recommend you write a business plan.
A Business Plan will help you take the idea and put it into the real world and see whether it is financially viable. A Business Plan varies from Business to Business but generally contain the following components. Executive summary, Business Description & Management, Market Analysis, Marketing Plan, Operations Plan, and Financial Tables.
These are essentially the documents you would take to your financial lender if you were seeking a loan to finance your idea.
To write your Business Plan, you have two choices. One is to hire a financial professional to do the plan for you, or you could do it yourself.
If you decide to do it yourself there is a short cut you can take that will save you a lot of time and money. And that is to use a Business Plan Template. A good template will allow you to customize your plan to your particular situation.
You may need to delete certain sections that don’t relate to your idea, and you may need to add certain sections. A good template should allow you to fully customize it.
Once you have a good template it’s time to start working through it and filling in each section as best and as accurately as you can. Be objective. Most people will instinctively overinflate projected sales and underestimate costs. Start at the beginning and take your time to work through the template.
A good template will spell out and ask you certain things about your idea therefore in each section and sub section you should be able to just answer the questions as accurately as possible.
Answers can always be revised and changed at a later date. Regardless of the business, writing a Business Plan using a Business Plan template will be in the general format as follows.
The first section is the Executive Summary. Here is where you outline your idea in a nutshell and provide a brief business model as to what your idea is. It is almost like a miniature version of your Business Plan and although is the first component, it is very often the last section that gets written. A summary of what the main components of your plan are.
The second section is Business Description & Management. A good template will delve into more detail here about your day to day operations of your business . You’ll be asked questions about business structure, either sole trader, partnership or company and why this is the best model for the success of the business. Where and how do intend to start your business? Explain issues such as insurances, licenses etc.
The third section relates t Market analysis and the template will inquire into the state of the market. Is it expanding, static or declining and what factors lead you to believe that your business will be successful. You’ll be asked about the nature and strength of your competition. How did you arrive at your pricing model and what contingent plans do you have in place if things go wrong? That is, sales targets aren’t met or an injury or illness to you or another important partner? Here you’ll also be asked about your customer’s profile.
The fourth section is about your marketing plan. How do you intend to advertise and promote your business? What sort of advertising budget have you set aside? This will also include issues about the pricing of your product or service. How do you propose to execute your marketing plan? Is there a timetable and advertising mix?
The fifth section relates to the operations plan. This is about the physical infrastructure that you require to get your business off the ground. From desks to computers to light bulbs. Necessary infrastructure is often underestimated before the business starts and can quickly become a drain on finances when you suddenly discover you need one new item after another. Preparing a thorough Business Plan will make you aware of everything you will need to start your business and associated costs.
The sixth section or thereabouts will contain the financials. Ideally spreadsheets that you can input data straight into. Such spreadsheets could include, but may not include the following worksheets. Present Personal Standing in relation to private assets and liabilities, Sales Forecast, Cash Flow Forecast, Profit and Loss and Balance Sheet.
After entering all the data you then just need to printout all the information and you have your custom made Business Plan. |
|
