You have come up with a breakthrough idea for your startup. Or you have decided to venture out in a traditional business but entirely on your own. You are sure about the success and feel confident that you have the necessary business acumen to run it.
At this juncture, as they say, have a plan to work and then work to that plan. A ‘business plan’ is a document that gives an insight into your product specifics, your value proposition, the target audience, proposed revenue and expenditure, and the milestones to achieve over next ‘x’ number of months, quarters or years.
1. WHY should you have a Business Plan?
Many startups or new businesses begin working on a business plan only when they get a meeting slot from investors. Contrary to a popular belief that a business plan is needed only for financing, a good business plan serves many purposes. Some of these include:
- Putting the pieces together – until you prepare a business plan, you will not gain enough clarity yourself, on whether all the internal pieces stick together or not. Writing a business plan forces you to identify the holes in your thought process and come up with solutions to plug those gaps.
- Obtaining finances – more often than not, businesses are started with funding from various entities like banks, credit societies or private equity investors. A business plan serves a powerful tool to make your idea saleable to these potential financiers. A well-documented business plan will make it easy for you to convince them why your business is likely to succeed and what steps you would follow to ensure that they get the returns of their investment.
- Attracting partners and employees – an important element of any business is to have the right mix of people working with and for you. A well-designed business plan highlights the roles and responsibilities within the upcoming organization and the skill-sets that will be required in future to fulfill them.
- Creating joint ventures, mergers and acquisitions – a few businesses are designed to move up the value chain and join hands with other larger or smaller businesses in the same sector, to create a multiplier effect. A well-designed business plan is a good place to document these long-term goals.
2. WHAT should a Business Plan contain?
A Business Plan should be able to instill confidence in its reader that, it is not merely a distant pipe-dream but indeed a workable and viable reality.
“Vision and Mission” of your Business
Entrepreneurs, by nature, are confident and positive people who believe in their plans and are willing to take risks to make their ideas successful. Before hastily diving headlong into the execution, set out the “Vision and Mission” or as others say, “Goals and Objectives” of your business.
The below ‘checklist’ may come handy to know what will help you to put these things together –
- Who are we?
- What do we do?
- What do we have to offer?
- Why will our customers pay us for our product or service?
- What resources do we have?
- Why will you be successful?
- How will we measure our performance and success?
- Why should someone partner or invest with us?
Startup Costs –
The most common question any investor or financier will be keen to know is the startup cost and potential revenues. Ask yourself how much capital do I need to start a company? As a word of caution, it always serves to be conservative in the beginning and estimate on the higher side. Once the actual expenses start showing up, the budgets can be re-baselined suitably. Depending upon the nature of your business cycle, the initial months, quarters will usually be difficult. So, as much as possible, try to forecast the financial statements, monthly cash flows, potential balance sheets, and corresponding annual cash flows.
Management and Operational Plans –
The section of your Business Plan must cover your team and the logistical aspects of your organization. What are the verticals that will operate in your company, what would be the budget for each team, how it will be tracked and what will be the measurement criteria to evaluate the success of each – all this will have to be covered here.
A good practice to follow is to have in place, contingency planning. If your Business Plan does not work as you have proposed or thought of, you may also want to spend a thought about alternatives that you would like to adopt. Contingency planning does not imply ‘planning for failure’ – it only means keeping options open in different directions to make your dream idea successful and progressing continuously and to ensure that you value your financiers’ investment and are always exploring means to repay their trust that they have put in you.
Sales and Marketing Channels –
The most important aspect of any business is the ‘customer’ since the customer drives the revenues. A thorough thought needs to be given as to how to acquire new customers and retain the existing ones. Your Business Plan should speak about what marketing channels will be employed to generate product awareness, what promotional campaigns will be employed, how much discounts and incentives do you propose to attract initial customers, how will newer customers be roped in, etc. and along with this, the costs involved in engaging these resources, should be clearly laid out. Depending upon the nature of your business, your preferred option could be digital marketing and social media advertising whereas there could be others who prefer the more traditional approaches of television and print advertising. Whatever options that you intend to apply, they should be well-documented and presented to your financiers.
3. HOW should your Business Plan be
While preparing your Business Plan, focus on its quality and not its length. The plan should be as precise as possible – after all, you only a handful of minutes of your financiers’ time-span to capture their attention, pitch your business idea and win their confidence so that they are willing to invest in your company and your ideas. Too much content does not indicate the depth of your thinking or completeness. Rather, a long document could be detrimental to your purpose and it may discourage your audience and drive them away from reading it. In other words, your Business Plan must be crisp, compact and be succinctly able to tell your story.
Business plan is a critical part of your story. The plan needs to be unique, precise and thoughtfully created for greater success of the business.
If the idea of creating a business plan boggles you, don’t worry. At Filings, we can help you create a business plan that clearly defines your business and the way it plan to work. For support, reach us at: www.thefilings.in | [email protected] | 044 – 46315959