Business plans need only be as big as what is required to run the business. Not all business plans are required to be a complete formal document suitable for submission to a financial institution or potential investors. Only develop and write a business plan which is suitable for the size of the company. A plan may be altered at any time, if or when circumstances change. Plans can start fairly simple and then be reconstructed as the new business grows and develops.
It is generally advisable to write a business plan before starting a new business. The planning process helps to get a clear understanding of the business, legal establishment and ways it may be developed. It is a way to help understand the purpose of the new business, marketing strategies and how to make potential profits. It is generally best to write a business plan in stages.
Sections to Include in Business Plans
A new business plan will generally have sections to cover different areas of the business. These generally include:
- Executive Summary – An overview of the business plan to highlight key areas.
- Company/Business Description – Describes the business, including legal establishment, history, purpose of the business and direction for the business.
- Products / Services – Describes what the business will be selling or what services it will be providing.
- Market and Industry Analysis – Provides analysis of current market and industry trends to establish the viability of a new business and projects the market share which the business may acquire.
- Business Marketing Strategy and Implementation- Identifies the markets and methods to execute the marketing strategies. Includes projected sales budgets.
- Operations and Management – Identifies how staff will be utilized, what systems will be in place, software which will be used and products or service development. Describes the management team and their responsibilities.
- Financial Analysis – Includes any past available financial reports, projected profit and loss statements, cash flow tables and budgets.
It is also advisable to include a section for contingency plans. This section should identify potential risks to projected sales and marketing. Include strategies which may be implemented if these potential risks where to occur.
Business Planning – Where to Start
Preparing a business plan need not be developed in the above order, but started with Market and Industry Analysis. By identifying current market trends, customers’ needs, how to approach them, along with a general industry analysis may help determine how and when to start a new business. There needs to be a demand for a product or service before any profit can be made. This process helps to highlight opportunities, or lack of, that might otherwise not be obvious. Business marketing is a vital section to include in the plan.
Business plans need to be simple, specific, realistic and complete. A good plan will also require someone to follow up and check on it, to ensure all areas are being implemented. Developing a business plan helps to highlight the areas of strength and areas which will require the most attention. A business plan also helps determine if a new business is going to have a successful and profitable longer term outcome.