Business plan – an entrepreneurial perspective
Every new business venture begins with a lot of passion, hard work and most importantly, a plan. Whether it is a start-up or an established business, a business plan ensures that a roadmap is ready to analyse and understand the various nuances related to the business. In fact, when an entrepreneur begins their adventurous journey in the dynamic world of business, they have many questions to consider. All these questions have a direct relation with the way they will handle their business. The business plan is therefore essentially a comprehensive list of questions and their answers are aimed at defining the direction of the business.
Where do you want your business to go?
This question quintessentially aims at defining the future strategy of the business. For instance, where would the business be in the next three, five or ten years? What is the future planning about the market share, revenue generation, etc? All these and more questions need to be answered when a business plan is framed. You need to have an ultimate objective to guide your decisions.
What is the product or service that you are offering as a company at present, or in the future? Is the product or service going to be a path breaker or a mere substitute for other products? Is the product or service profitable? The potential value of the product or service, which is to be offered, and money, tools and time required, from the procurement of the raw material to the delivery of the finished product to the consumer. All these have to be identified as well as worked upon religiously.
The business plan needs to identify the size of the market as well as the ways and means to tap it. A useful method would be to go for segmenting, targeting and positioning to find out the demand and the population that needs to be zeroed in. The market analysis is integral to a successful business plan because without prior knowledge of the market it would not be possible to optimally utilise all the resources in hand.
Ownership of the business
Some birds like to fly in flocks while some prefer to fly solo. Before you embark on your journey, ask yourself, which bird are you? Do you want a sole proprietorship or a partnership or perhaps an entire team to give shape to your dreams? Each has its advantages and disadvantages. This decision can make or break your business.
Unless you are well aware of the kind of companies you are going to compete with, you are not ready to launch your product or service in the market. The reason is, since you are a new player in the market, you are entering a zone, which is already well established and sometimes even saturated. In these circumstances, until and unless you find out about your competition, as well as study them enough to discover the possible pitfalls (as well as the success stories) which they have already experienced, you may make the same mistakes yourself. However, when you analyse the competition you may identify your competitive advantage over them.
The product or service has been created with an aim to sell to the targeted population. After doing the market research and finding out the targeted population, it is time to analyse the various consumers that the business is aiming at. You need to know what are the demographic as well as the psychographic profiles of the consumers, and how can the specific demands as well as the requirements be fulfilled by the product or service on offer.
Core management team
A business is only as good as its employees. Until and unless the employees are good at what they do, as well as create value for the company, what is the point? A start-up has to hire very carefully. The issue is not many would be interested in joining a company that is yet to make a mark and does not have an established brand name. In addition, start-ups mostly do not begin with a lavish ten-figure budget to accommodate expensive hires. However, in spite of all these starting issues, once the team is created by selecting the right person for the right job, the business should then focus on executing the various opportunities that it has identified.
As mentioned not all start-ups begin with a lavish budget, some have to operate on tight budgets and therefore managing the resources as well staying afloat becomes a very tough job. In this situation, financial planning plays a crucial role in the context of the company’s financial health. Some start-ups also aim for investment from various investors or other companies to. The idea is to get enough funding to start the operations and optimise the available resources for that.
The operations plan is spelled as the ‘action plan’. In other words after you have zeroed in on the various whys and wheres it is time to find out the hows. What is the roadmap? How do you plan to begin the venture? What are the various milestones that you need to cover in order to successfully reach where you want to reach in five, ten or fifteen years? How do you plan to go about your business on a day-to-day basis? The operations plan is all this and more. In order to get maximum benefit out of the proposed operations plan it is important that small as well as big goals are set and then followed.
The feasibility study is important to discover the possible hiccups and roadblocks that one may stumble upon. This will also outline a blueprint for the job in hand on a daily basis and eventually for the whole business. A feasibility study acts as a filter, screening out the potential pitfalls that one may fall in. It is analyses the viability of the project. It aims to find out whether the plan made is even worth investing money and time in or not. Without a properly executed feasibility study, it is difficult to assess the possible issues as well the repercussions that one’s actions may result in.
Why is your business plan better than others are?
After answering all the above key questions, you are now in a suitable position to answer the most important question of all, why are you better? There are millions of startups out there, trying hard to establish as well as survive the mad world of business. What is so special about you that you think you will succeed? What are your strengths and weaknesses? What sets you apart from the crowd of similar products? It is easy to make a business plan, placing all ideal thoughts on paper. However, the question is how far the ideas and thoughts are feasible.
What do you call a business plan, which does not come with an emergency button? A failure. No business plan can ever be foolproof. Why? Because there are so many things that can and will go wrong in the course of execution of the plan, and hence without a ‘plan B’ to tackle them, you are only inviting disaster. Contingency plans are a safeguard against any misstep or mistake and would protect the business against failure.
In order to create a sound business plan, it is essential that all of the above items are kept in mind as well as practiced. Business plans give you a sound base on which you can build your arguments and hone your actions. It helps to create a mission and vision statement that loosely reflects the ‘to do’ list of the entrepreneur which they prepare in order to achieve the desired results. An entrepreneur who seeks investment in order to get funding for their start up would always do better if they clearly write down their plan in order to attract potential investors. Many companies, which have made a big name for themselves today, started by writing down their business plan which they eventually used to convince their potential investors.
However, it is not only the cash-starved start-ups that need a business plan; businesses at all stages need a plan. Regular planning also helps the entrepreneur to keep in touch with the various aspects of their business, which they may otherwise ignore. This would then help to adapt to any sudden market change and cope with it. In order that your product and services remain competitive, it is essential that the business plan is created and updated as circumstances change. After all creating something from the scratch takes a lot of effort and hard work, but if the modus operandi is pre-planned, then everything is much easier and the chance of ultimate success is maximised.
If you want to learn how to produce a business plan for a new business then you can do so by taking the Level 3 Certificate in Business Start-up.
Mason, C. and Stark, M., 2004. What do investors look for in a business plan? A comparison of the investment criteria of bankers, venture capitalists and business angels. International Small Business Journal, 22(3), pp.227-248.
Sahlman, W.A., 2008. How to write a great business plan. Harvard Business Press.
Timmons, J.A. and Spinelli, S., 1999. New venture creation: Entrepreneurship for the 21st century.
Der Foo, M., Wong, P.K. and Ong, A., 2005. Do others think you have a viable business idea? Team diversity and judges’ evaluation of ideas in a business plan competition. Journal of Business Venturing, 20(3), pp.385-402
By an iQualify UK staff writer