If you have been thinking of launching your own start-up business for a long time and now you have finally decided to do it, then, the first step you would need to take is to construct your business plan. This plan will help you put all your thoughts related to your business on paper so that you can have a clear vision of what your business will look like. It is not that a business cannot function without an effective business planning. It is just that a business plan is there to provide you clarity when you feel lost in your business. It is also used to calculate facts and figures for the effective functioning of your business. So instead of straying off from your goal in business or worse starting over from scratch, it is a wise decision to construct a business plan beforehand.
Why is constructing a business plan important?
A business plan is important for various reasons. If you are a young entrepreneur and want to start a new startup you need to create a business plan for venture capital firms for funding. It is always a great idea to have a sense of direction before starting your business. This sense of direction is provided by a business plan. Below, there are various reasons mentioned why a business plan is important for your business:
To align your business goals on paper
A business plan is important for you to ask yourself all the right questions, albeit hard ones, to get you on the right track. Such questions may require you to reflect upon your business goals and where you expect your business to be in the coming years. It will allow you to set a period in which you will have to achieve the required goals to be on the right track. Other than this, this approach will also help you to keep track of the difficulties that you may face in your business. This way you can think of insightful and well-researched ways in which you can tackle the problems of your business.
Increasing your business’s chances of success
A business plan will aid you in the long run by providing you with solutions to the problems that most newly start-up businesses face in their initial years. These problems include few customers, lack of capital, wrong pricing strategy, and severe competition. Therefore, a business plan will help you forecast the problems before they arise and you can think of probable solutions to all the problems that you may encounter in the near future.
To have a financial layout on paper
Any business needs to be secure financially and not to run into a financial crisis in the near future. This is where the business plans come in. They help you list down all the possible ways that you can adopt to secure financial funding. Whether it is pitching to venture capitalists, or viewing the option of taking a loan from a bank, a business plan is a good way to start. It is because whoever is going to be lending you money needs to be assured that your business is worth investing in.
To narrow down the risk factor
As mentioned above as well, a business plan is a good way to reduce the risk factor in any business. Any difficulty or obstacle becomes much more manageable when you have a business plan sitting right in front of you. You can crunch the numbers and use appropriate logic to better understand the problem and find the right solution for it. Having a business plan up your sleeve will aid you in making better decisions for your business and leaving less up to chance.A business plan is a good way to reduce the risk factor in any business Click To Tweet
To hold the objectives and goals of your business
Including the objectives and goals of your business as well as the probable ways to achieve them is a must for a business plan. Therefore, a business plan is great for your team as well who might need answers at times when you are not available. They will know that they have a business plan to turn to in case of any doubt. A business plan can also be considered as a guide book for your employees to align their priorities with the betterment of your business.
Write Your Executive Summary ConvincingWrite Your Executive Summary Convincing Click To Tweet
An Executive summary is a brief story of your workable steps. It should be very easy to understand to anyone, especially for investors. It should describe your business planning and the solution strategy solved by your business to the community.
In the executive summary, you should only discuss the main points of your business. Research showed that the one-page executive summary works well then the two pages or longer executive summary.
It should cover the following;
- Details of your business
- Your competition
- Target market
- Solution your business is going to solve
- Future milestones
- Team Introduction
It should be noted that if you are writing an executive summary for the investors you can create a different executive summary for them because investors are always interested in more opportunities and profits. In such a situation you can add three more points in the executive summary for investors.
- Requirement Funds.
- Projection of Profit and Loss.
- Exit Strategy (in case of loss)
Tips for business planning
There are many templates available online to aid you in writing a business plan. However, this does not mean that you have to go with any particular one and fill in all the sections as it has been prescribed in the templates. Just as your business is different from others, your business plan will also need to stand apart from the rest and must be made in a way that is best suited to your needs. Below are some tips for business planning that will help you craft your business plan in the most effective way:
Think of the content rather than the template
As it is already emphasized above, it is a must that you think about what needs to be included in your business plan rather than which template you will be choosing for it. Including all the right things will help your business in a big way. It should be able to define your product, list down your goals and objectives, including ways to obtain financial security and ways to maintain a regular influx of income. Other than this, a business plan should also incorporate all the challenges that might be faced by the business as well as standing against the competitors. The customized written business plan for your new business may be the basic requirement of your business planning.
Ponder over your target audience
When constructing a business plan, you must think about your audience and what they will think about your product. You must also decide on a pricing strategy that is enough to make your business profitable for you while providing quality products to your customers. You should be ready to answer some tough questions in your business plan such as how you are going to be making money in the future and are people going to want to buy your product when you pitch it to them.Business Planning should be able to define your product, list down your goals and objectives, including ways to obtain financial security and ways to maintain a regular influx of income. Click To Tweet
Include important information only
Do not stray from the main purpose of your business planning, which is to make your business a success. Therefore, you should only include information that will be useful for your business plan such as what you are selling, for how much, to whom, financial security, expected problems and their solutions, the processes, competition, and risks.
Do your homework on the industry you are about to enter
You must conduct full research on the market you are about to enter. This will provide you with an insight into the business competition and think of new ways to combat it. Other than this, this will also be a great opportunity for you to learn more about your business venture and see the international market as well. You must not get fully absorbed in the whole research process but you must also not be completely clueless about it either.
Have a go-to plan for your business
For your business to be a success, you must include proper steps to take to make your business move towards its goals and objectives. It is a known fact that many new businesses fail within the first five years, therefore, you must have a step-by-step business planning guide as to what actions are needed to be taken to make your business a success.