What Is A Business Plan And Why Do You Need One?

Plan, a four letter word, is a crucial step for performing any task. From waking up in the morning, to going to bed at night, everything needs a plan. Even a small task like lighting a cigarette or writing a letter to someone needs some planning before you actually do that. Planning depends on how big or small your work is. For small things like going to the office, you only need to think of the way you are going and time it will take. But for bigger tasks, like opening a business or starting a non-profit venture, you need more time and planning.

Businesses, despite how big or small they are, need a plan and why so, this article will help you learn out.

What Is A Business Plan?

A document that consists of details about the business, industry and strategies for continuous growth is called a business plan. It depicts what are the objectives of a business and what are the things needed to achieve them. Business plan is the first step in the direction of turning a concept into a problem solving venture. 

Business plan works as a foundation for all the steps to be taken in terms of marketing, finance and operations. It is important not only for internal members but the external audience also needs the business plan to understand the worth of the company. For example, businesses can use their business plans to showcase their ideas in different platforms for funding. A number of investing firms and banks made project reports or business plans a prerequisite if you are expecting any type of aid from them.

Every company, from those in prototype stage to well established ones, need a business plan. Depending on the goal that the company is chasing, the plan should be updated from time to time. This will not only help the business to have a clean view of the objectives but will help pave the way while keeping an eye on industry trends. A business plan is extremely useful if the company plans to change the way it is working.

Must Haves In A Business Plan

1.   Executive Summary: An executive summary is a small introduction to the whole team that a business includes. It also defines the base of the company along with their qualifications and strengths.  

2.   Company Overview: This part shows an overview of the company (future of the company in case of start-ups). This also defines what service or product a company is providing.

3.   Industry Analysis: A self-explanatory term, Industry analysis, covers the contemporary and future trends of the industry.

4.   Customer Analysis: Anyone, who is going to start a business shall understand what customers want and how much they can pay for it. An understanding of the same can take the business to peak.

5.   Competitive Analysis: This part of the business plan shows how much competition of a particular product or a business is in the market. It shows who the major players in the same domain are and how stiff the competition is.

6.   Marketing Plan: No matter how good your products or services are or how precisely you solve the business problems, a good marketing strategy is something every business needs. Similarly, business plans also need the marketing plan part as they act like a how to book while making the

7.   Operations Plan: This part includes how the business will operate.

8.   Financial Planning: Managing finance is an important thing when it comes to business. Finance planning in a business plan means a strategy for form where the money will come and to where it will go. It also consists of management of books, cash flows etc.

How To Make A Business Plan?

Below are the steps for how to make a business plan easily.

• Get the Research Done

Business plan making process starts from research. A well-researched business plan helps readers to understand the potentials of the market. Moreover, it lets them get thoughts on what challenges the business will face. Depending on the product or services you are offering, you can conduct the research. Also, if you just have a quirk to open a business and you know nothing about businesses, research will help you figure that problem out too.

• Learn with Some Examples

Precaution is always better than cure. In business also, it is better to learn from others' mistakes, than from your own. A number of businesses are forced to close just because they lack any prior research. To have a better understanding you can find some of the business plans formats examples. The internet is full of example business plans based out of deep research in various industries.

• Ask Your Friends and Colleagues

There is nothing that your friends or colleagues can’t help you with. All you need to do is to get to the right person. Ask people around you about the industry you are planning to invade. Additionally, you can ask them about what masses are looking for and how those demands can be fulfilled.

• Make a Draft

Planning and action are two different things. People do the former and leave the latter. But, both are extremely important and need equal attention. While the majority of people find actual business ideas, very few of them gather courage to conceptualize it. While making a business plan also, you need to come in action mode rather than just planning and researching for thousands of years. Create your first draft as soon as possible and then make the changes accordingly.

• Edit as Much as You Can

There is no one who can achieve everything at once. In your business plan also, if you think part is not good, and can create a mess in future, remove it. Standard rule for making a business plan says, create a rough draft and edit it as much as you think is right. Changing industry trends could be the major reason for why you need to change that. Growing financial needs from time to time could be another.

Why You Need In A Business Plan

There are numerous reasons for why you need a business plan. Five of them are mentioned below

• To Determine Goals

Once you know the destination you are heading to, your feet will be the way ahead. A business plan you to find or at least plan that destination. To reach any destination in the desired time frame, you need a map. A business plan acts like a map by which you can operate, and look for solutions in hard times.

• To Achieve Determined Goals

When I was a kid I used to think about opening an Ice cream stall so that I could have both the money and the ice creams. Then I used to think of being a police officer, probably for the power they have. But in both the cases I never actually searched or jotted down the steps about how to be one. I think this is an important thing that businesses often miss. Determination of goals and keeping stuck on them until it is achieved is something everyone needs nowadays. A written business plan keeps reminding you what your actual plans are and what you should do to achieve them.

• For Attracting Customers and Funding

A written business plan acts as an important tool when it comes to presenting your business on any platform. It helps to let all the interested parties know how the ideas will pay. A good plan attracts investors to invest in the business while a bad one can make them flee too.

• To Understand Customer and Competition

Creating a plan makes you think with multiple perspectives while keeping the profits and losses in mind.  It lets you know about who all are the competitors in the market, how much area do they cover and what are the chances to beat this competition. Customer need is an important thing if you want to conquer the competition. Only a business plan can help you figure out what customers exactly want.

• To Avoid Wrong Decisions

A business plan can help to pave the path and reduce chances of taking unplanned steps. Avoiding unplanned decisions helps the company to be more consistent toward the goal. Suppose For example, the financial planning part of a business plan will let you know how much you have and what amount you should seek for.