Overtime, considering the business world, writing a business plan has to some extent been inevitable, as business owners and start uppers are kicked to the edge of making one just when the need arises.
This post gives an overview on writing a business plan, critically considering various businesses to act as a perfect guide.
What’s a Business Plan?
We can’t go forward into discussing how a business plan is been written, without first clearing the air on what a business plan is.
A business plan in its simplest definition is a formal document which outlines the basics about your business, products and services. Running through the kind/type of market you are targeting, the individual or collective goals you have for your business without excluding how you intend to achieve those goals.
Why a Business Plan Is Written?
Just as there are various reasons for making/writing certain documents, so also a business plan has got a purpose for it. Below are some basic reasons why we write a business plan;
- A business plan will be needed when one wishes to take loan from a financial institution, probably a bank for clarity of legit grounds.
- Business plan is an expected requirement when one needs to pitch his/her business or idea to an investor. Here it serves as a document that gives the investor an overview of the business he/she is implored to invest in.
- Similarly, a business plan is also required when bringing business to partners as it contains a reasonable detail of the business.
- In most cases, when you need to figure out a means to communicate your business idea with potential customers, a business plan is just right to doo the job rightly.
- For a start-upper, a business plan helps in determining the feasibility of starting a business in a particular industry.
- Most basically, a business plan helps one figure out their operating plan.
Who Writes a Business Plan and to whom is a Business Plan written?
Who writes a Business Plan?
- One who is looking to start a business
- One who wants to expand an already existing business
- One who wishes to restructure his/her business
To whom is a Business Plan Written?
Business plans are written to the following persons;
- To investors
- To loan officers
Types of Business Plan
There are two types of business plan namely;
- Traditional business plan
- One page business plan
One page business plan:
As the name implies, is a business plan of just a page. It’s practically the starter point when considering a traditional business plan or it’s a leaner version of the traditional business plan.
In the one page business plan, its words are structured after having a clear answer to some questions which includes; knowing your business vision/mission, the objectives and strategies to be implored, verifying and ascertaining the business startup capital, anticipated expenses, desired income and your uncommon action plans – then revolving these answers in your writing through some basic headings such as the business, proposal, ownership and investment.
Below is an illustration of a simple one page business plan.
Niger Standard Industry is a limited liability corporation registered in Anambra state that rationally provides high quality paints to construction firms and individuals erecting building structures, with the sole aim of adding quality to the looks of their structure.
Being the best producer of paints in The Daily’s Magazine for year 2018, her raw materials for production are farfetched as they’re imported from Germany down to West-Africa.
The proposed market for Niger Standard Industry covers mostly eastern part of Nigeria, which is about six states in number as the population in such areas is on a rise. Approximately 60% of streets within these areas have about two (2) to four (4) buildings yet completed (under construction and thus, needing the service of paint manufacturers and painters).
Since we rely on far Germany for raw materials used in producing paints, if probably the cost of shipping those products becomes too high, we’ll be faced with a great challenge in producing. However, we may need to expand our suppliers list into South-Africa or Ghana as they’re closest to us with suppliers of same product. Nevertheless, we did prefer getting that of the Germans’.
The CEO of Niger Standard Industry, Schwiz Joseph M, has a ten (10) years experience in paint production and management, working for Niger Standard Industry and a consultant to other firms with same dealings around Eastern Nigeria.
He bags a Degree in Chemical Engineering and a Diploma in Industrial Production Engineering from the University of Nigeria and Metallurgical Training Institute respectively.
Niger standard Industry is asking for $50,000 in investment funds to support her expansion plan in the current industry location. While $20,000 will go towards renting additional space around the current location, $5,000 in building two (2) for storage of product and nearness to market for sale(one around Onitsha main market and the other in Ariria market, Aba). $15,000 in the purchase of CNC paints mixing machines for high efficiency and $10,000 for salaries to take in extra employee to boost growth.
Traditional Business Plan:
Most often, the traditional business plan is referred to as formal or structured business plan. It is a long and very formal document that contains large amount of information as compared to the one page business plan.
What are the content of a Traditional business plan?
Since the traditional business plan is a little bulky, its’ typical sample will include some sections which a rundown of them all is listed below;
- Executive Summary:
- This section contains a hint or highlights the most important information in your business plan. It has to be a little catchy and convincing, for most times investors end up reading only the executive summary due to time constrain.
- Context, Idea and Rationale: In this section, your business idea is questioned. As it’s in this section that ideas are presented wholly.
- Mission Statement, Goals and Objective: Consider including the reasons why you are starting the business, its purpose, your smart goals, how you intend achieving your goals in this section.
- Market Analysis: It is expected that you give details of the industry you intend selling your products or services in, incorporating the targeted market and competition. More so, you can consider the market size, market growth, market profitability, market trends and key success factors in the market.
- Competitor Analysis: This section basically gives a hint about the competitors’ identification, competitor’s comparison, competitors positioning, ranking and key findings.
- Marketing Plan: Here you ought to outline where your business fits into the market, how you intend placing prices of your goods/services, the much you hold for promotion, how you intend to sell and your choice considering advertisement.
- Organizational Plan: This involves how your business is structured, rolling out the team of founders, business legal form, key personnel, key external contracts, office and plant location.
- Financial Plan: Most basically, this section is for financing the business. The financial plan gives an overview of set-up cost forecast, cash flow forecast, balance sheet forecast and financial ratios.
- Action Plan: This entails your answers to certain questions like – what specific tasks and items you need completing? What would be needed in getting those plans accomplished in line with hitting your objectives? Providing the answers to these questions helps you actuate various actions that will lead to business growth.
Things to note/ Tips in writing a Business Plan
- Traditional business plan is also known as a formal or structured business plan.
- A one-page business plan is also known as Lean Business Plan.
- A business plan can be more practically referred to as a blueprint that guides your business.
- Your business plan must provide critical answers to these questions; what is the need for your product or service? What is your competition and how will you differentiate yourself in the market place? How will you make money? What will your sales versus expenses look like? How will you market your business? How will you get started? What are your capital requirements?
- For easy readability, use one font size throughout the business plan (point 12 is much preferred).
- You can make use of some tools in writing your business plan. Try checking these out – SBA Business plan tool and Rocket Lawyer.
- Have someone else read through your business plan, to check for errors.
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