Given how crucial a role it plays, all business owners need to develop and follow a business plan to launch a successful business.
Sir Winston Churchill rightly said; "He who fails to plan is planning to fail."
According to Peter Drucker, one major reason businesses fail is because the management didn’t articulate “what is our business?”
The answer to this question can be found in every business plan under “Company Overview” and also under “Product and Services.”
Given how crucial these elements are, all business owners need to develop and follow a business plan to launch a successful business.
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Ingredients of a Successful Business Plan
Company overview is a one-page description of your company and it answers the following question:
- Organization of the company
- Type of company (sole proprietorship, partnership or corporation)
In the introduction of the Company Overview, the following questions are answered:
- Name of the company
- Is the company established or just forming?
- Location of the company
- Organization of the company
A mission statement (tagline) of the company is a short motivational statement about the goals and vision of the company. Remember to make the statement concise, exciting to your readers and target market.
Idea, Product, and Services
This section outlines your business idea, product, and service your company is planning to sell or offer to customers. Spark interest in the reader by generating excitement about your offer, be factual and provide data to back up your idea, product, and service.
Data to back up your product, idea, and service can be drawn from the following sources:
- Interviews with customers and industry practitioners
- Competitor product or service metrics
- SWOT analysis
- Customer survey
This section describes the features of your proposed Idea, Product, and Service and it should contain the following information:
- Description of the product, service or idea
- Full information on the pricing of your product, service or idea
- The uniqueness of the product and service
- Logistics regarding product delivery
- Market analysis to support demand for the product or service
- The kind of support and services to be provided after sales
This section under Idea, Product and Service would describe the benefit of your offering to the target market. When describing the benefits of the product or service think of the impact, the product or service would have to the customer.
When describing the benefits of your product or service, use the following questions as corner pieces:
- How does the benefit address a specific need of your target market?
- Evidence to support the benefits of your product or service to your target market.
- Prepare a table containing the features and benefits, each feature should have a corresponding benefit to the target market.
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Market and Industry Analysis
The Market and Industry Analysis section in your business plan outlines the market and industry, you are about entering. This section gives you (business owner) and the reader (most likely an investor) of your business plan, a concise and in-depth knowledge of the problems, opportunities and forces controlling your target market.
The required information needed to understand your market and industry can be sourced from the following:
- Customer surveys
- Competitor product
- Supply chain analysis
- Competitor research
- Internet, trade journal and other brochures.
The following information should be mentioned and described under Market and Industry Analysis:
This section outlines your consumer, best point of entry into your market, and niches that could be exploited. The target market section should describe and answer the following:
- Target Market Size
- Buyers Persona
- Business Market
- Customer Research
- Industry Structure
- Competitive Environment
This section determines the success of your business and venture capital. Your marketing plan describes where and how your business would fit into your target market.
To draft an in-depth marketing plan, research would be performed on your existing customers and potential customers. The value of an in-depth marketing plan cannot be quantified as this would convince investors on how you plan to bring in customers to buy your product or use your service depending on the type of your business.
An in-depth marketing plan consists of the following:
- Target Market Strategy
- Channel Strategy
- Product/Service Strategy
- Pricing Strategy
- Communication Strategy
- Sales Strategy
- Revenue Model
This section of your business plan describes how you plan running your business, delivering value and ensure the success of the business.
Every operations plan is expected to contain the following:
- Operations Strategy - this describes how you plan to fulfill your marketing strategy using operations.
- The Scope of Operations - this describes the kind of personnel to do in-house operations and the kind of personnel to be contracted for external operations.
- Ongoing Operations - this describes how your business would operate on an on-going basis.
This section describes how profitable the business will be and how cash will flow. Bear in mind, that without a proper business concept, marketing plan, and mode of operations then your financial plans are going down the drains with your investment.
A survey of more than 1000 Australian SME business owners found that business failure was most likely because of an inability to manage costs.
A professional financial plan would contain the following information:
- Financial Projections
- Financial Summary
- Key AssumptionsRisks
This section describes and outlines how much money you need to run the business and how you plan using it. The funding section would outline in details the kind of funding needed by your business and explain what you are offering to lenders and investors.
The funding section of your business plan should contain the following information:
- Funding Requirement
- Sources and Uses of Funding
- Funding Strategies
- Funding Request
Every business plan contains more sections than we discussed but the sections mentioned above are required to build a successful build or get venture capital to fund your business.
Using the sections above as a template, go back to your table and prepare an in-depth, concise business plan.