By Rabie Fares
Okay, so you've read up on every recommended business management book out there, digested every possible biography of different successful CEOs (Steve Jobs! Jeff Bezos! Warren Buffet!), subscribed to the leading business magazines and, regularly, you tune in to either Bloomberg or CNBC. You want to start your own business that, you hope, will become an industry heavyweight. You have ideas – lots of them – but right now they're nothing more than mere concepts running through your head.
So what do you do? What's the next item on the program? Where do you begin? The first step that you need to take is to make a business plan for your business idea.
In a nutshell, a business plan describes your business and its future, what you intend to do and how you'll do it, who will run the company, your target market, the market landscape in your area, sales and profit projections as well as your unique selling proposition.
Why Do You Need a Business Plan?
Is a business plan really important? There are many aspiring businesspeople who think that a business plan is an extraneous step – it’s not really needed since everything is already in their heads. But the truth of the matter is, writing a business plan is an essential part of starting a business. Aside from putting your ideas concretely to paper, a business plan is key when asking yourself “how to find investors?” If you intend to seek outside funding or wish to bring in investors, having a business plan at the ready is crucial especially when making that all-important pitch. You can show potential investors your plan and they can see for themselves how sound your idea is.
We’ve established the importance of making a business plan to achieve your goal of starting a business. We now need to go to the nitty-gritty of actually making a business plan.
An effective business plan must contain the following elements. Each section in the plan answers a specific question or addresses a specific topic. Your business plan should contain all of these elements for it serve its purpose:
1. Executive Summary
Your executive summary is a general overview of your business plan and should include the profile of your company as well as the targets and goal you wish to achieve. The executive summary is also considered the most important section of the business plan as this is the first and best way to grab the interest of a potential investor.
2. Company Description
As the title suggests, the company description is where you provide the details on what you do – for example, the kind of products and services that you provide – and the different segments of your business. Some of the items you may want to include here are your target market and the marketplace you intend to cater to, how the products and services you provide can satisfy the needs of consumers you intend to reach, and what elements set your business apart – your competitive advantage – and how you intend to leverage them in order to succeed.
3. Market Analysis
In your market analysis, you should be able to put forth the extensive knowledge that you have concerning your industry and your market. You should be able to back these up with ample research, as well as updated data and figures and feasible projections. Specifically, it should contain the size of your market, the present needs of your market, your competition, strengths and weaknesses, how much market share you expect to gain, pricing and your gross margins targets.
4. Organization and Management
In this section you discuss your company's organizational structure, shareholder details, your board of directors and your management. Furthermore, do include the roles that each member of your management team plays, their respective backgrounds and the strengths they bring to the table.
5. Product Lines and Services
Here, a detailed description of your product or service is listed, highlighting how your target customers can benefit from your offerings. Aside from giving a description of your product or service you should also include details about its life cycle, intellectual property, and the product development process.
6. Sales and Marketing
Through this section, you should be able to map out your marketing strategy (How do you intend to promote your business? What sales tactics do you intend to employ?). Marketing is crucial as it is a way for you to attract customers and build your business. You should also discuss your advertising and promotions strategies and the various activities you intend to employ in order to drum up sales and create awareness and recall.
7. Funding Request
Use this section to help you in answering the question “how do I find investors?” What are your funding requirements for both your short term and long term plans? How do you plan on using the funds you receive and where will they be allotted? Are they for working capital, expansion, or debt refinancing? Be specific as well in the amount of funding you need.
Also critical to your request for funding are your financial projections. When do you expect to turn-in a profit? What is your forecasted income? Do include your forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets as these are the items that creditors and prospective investors will be most interested in.
When you sit down and begin preparing your business plan, do keep these simple tips in mind:
1. Determine your goals and objectives
2. Outline your financing requirements
3. Think about what you intend to do with your plan
4. Always keep marketing in mind
5. Update your business plan regularly
6. In writing your business plan, stick to the essentials and fundamentals and be sure that they are well supported by solid analysis. And, most importantly, keep it simple, concise, and straightforward.