Part 2 of Your Business Plan: A Road Map to Success
Now that we have given an overall description of our business, we need to take a close look at the core components of it. These are the sections that will act as backup to your executive summary.
Marketing Plan
This is the section where you describe in detail what your product or service is. Put a name to it, why it will sell, the price point and how you came up with that price. If there is no existing market, then tell how you plan to replace the substitute product that is currently in use by your clients. Talk about why your clients will want to switch, how you plan to promote your brand and how you want to distribute your product. Demand management is a term that may or may not apply to your business, but understanding it will be important. There are two meanings but for our purposes, we will discuss it in a business context rather than an economics one. Demand management refers to the management of the distribution of products and services. If demand becomes more than supplies, then a redistribution or better management of the supply is needed. If your existing business offers a product or service that falls into this situation, you will need to have a plan for addressing it. Perhaps, that is why you are drawing up your business plan in the first place. If that is the case, then spend some time on this section, do some brain storming and lay out solid theories for success - then test them!
Operational Plan
The operational plan is a detailed description of your operations. Here is where you describe your supply chain, the exact needs for facilities and equipment, plus your warehousing or storage needs. All aspects of information systems, business communications, security and privacy should be laid out very clearly. Technical language can be used, but be prepared to translate it into layman's terms. Human resources can be a large part of the operational plan depending on the size and age of the business. If you are a new business, then chances are the staffing requirements are relatively small. If you are an existing business with a full staff, then describe in detail the structure of your workforce. List roles of management, subordinates, their interaction and the system of reporting. Include accurate job descriptions, compensation packages and regular availability. Many existing business find themselves drawing up a business plan for the purpose of diversification. If this is the case, then here is where you will need to include a detailed training plan for your employees. Training your staff costs time and money, factors that are an important part of your operations.
Financial Plan
This is where you get to talk about how much it costs to run your business. The three basic components of a financial plan are: balance sheet, income statement and cash flow statement. Even if you are just starting your business, you will have already spent money on drawing up your business plan, doing your research and testing your product. All of these expenditures should be accounted for in your balance sheet or general ledger. If you have already made sales, then record them as well. If the purpose of your business plan is to ask for a loan, then show in numbers what it costs to produce your product and why you need financial assistance. Show how you plan to make money using your borrowed money, and in turn pay it back to the loaner. Forecast on an odd year basis. For example, show your financial projections for one year from the time of borrowing, the third year, the fifth year and the seventh year. Provide annual, quarterly and even monthly forecasts if they will not be redundant.
Risk Analysis
A risk analysis may or may not be needed for your business plan. It really depends upon the specific details of your market and your product. To understand, let's first look at the different kinds of risk. Market risks are changes in your market that could adversely impact your business. For example, a drop in customer base, difficulty getting into the market, significant threats to market share by competitors or too large of a marketable area to cover. This last one, too large of a marketable area to cover is closely linked to another set of risks to analyze: operational risks. If your area is too large for you to service then your clients become frustrated and go elsewhere while you are still spending time and money on trying to service them. It is an easy mistake to make and a significant hazard. Staffing risks are a common issue in all sizes of business. Hiring the wrong person for a position will cause money through redundant work being done (to make up for shortfalls), more time spent on training than is usually necessary and the extra effort needed to legally lay the employee off. Lack of availability of a skilled workforce is also a risk. If there is a union involved, there may be disputes resulting in strikes or other actions. Managerial risks may or may not be relevant with your business, but they are still worth thinking about. If your manager makes a poor decision, it may end up costing you money or market share. If your management does not interact well with your investors, it may damage the relationship your business has with them. Financial risks are closely linked with all the other risks listed so far. Each potential instance could end in a financial loss. Additionally, there are risks of investors pulling out, litigation and liabilities.
Finally, you need to dress up your business plan. Include a cover page, table of contents, and back up documents. If you have a brand and a logo drawn up already, make use of it. You should feel confident about your business plan. Be proud of it, like it is the voice of your business. If you do not feel like it appropriately represents your vision, then go back and change it. There will never be a final version of your business plan. As your venture evolves with the market, then your plan should also do so. Do not be afraid to follow the trends, watch the market and keep a close eye on demand. As it all fluctuates, so should you. Some business owners redo their plan annually, others bi-annually. Whichever you choose, just remember to be realistic about every aspect of your business.
Questions and Answers
Business plans are considered the resumes of businesses. They give a clear description of what your company offers, how much profit is expected, how the business operates, as well as how soon these goals will be met. If you want to start a business, you need to write a business plan, as no financial institution will ever make the mistake of approving a business loan without going through the blueprint of success.
9 Essentials For Every Business Plan - The article includes the 9 essential components of any business plan
What is a Business Plan? A business plan can be defined as, "A document or forecast plan describes the purpose and objectives of a business/company, its strategies, description of products and services, target market and financial forecast". Importance of a Business Plan in Strategizing Efforts Many of you will raise the question ‘Why should I write a business plan'? The answer to this is simple. Just as a builder cannot start constructing a building without a blue print.
There is a famous expression, "Falling to plan is planning to fail." In order to secure start-up financing many business plan owners write business plan.
Business plan is the written explanation of a business model. Those concerned in the planning development and management are the most likely to employ a business plan.
Whether you are planning to launch a new product in the market or expanding you business operations, you have to make a business plan to attract lenders, such as banks and financial institutions. You cannot make a business plan on your own unless you have proper research and writing skills. Fortunately, these days there are many writing services and online resources available to assist in you in business plan writing.
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The key reason why some firms thrive while some implode during an financial recession is still a puzzle to many people business-owning business owners. Some wrongly assume that all businesses should suffer via recessionary cycles. But the truth is that some companies are usually essentially recession-proof, and it is not necessarily because they are much larger, better known, or a lot more generously capitalized.
Companies like Arch Coal (ACI) and Massey Energy (MEE) watched his or her stock climbed.
Ten years ago ecommerce was still a cool buzzword that everyone wanted to try, but at that early point it was largely limited to the Business-2-Business world. The use of personal computers, mobile phones and the internet was still experiencing its first period of growth, so the average person sitting in front of their behemoth CRT monitor hadn't grasped the potential of the web quite yet.
Now that the smartphone has made the office truly mobile, there are literally hundreds of thousands apps claiming to be the best at, well everything. When it comes to business, most people do not want to experiment with business related apps that may not work.
The office is now truly mobile, and not simply because of laptops and notebooks. The smartphone is leading the team of time saving digital devices in its ability to manage business tasks while on the move. Invoices can be composed, emailed, paid and synced with the home computer. Calendars tell you where and when to be, what to wear and how to get there.
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