When starting a business, one key document needed as a guide is the business plan. It is a document that clearly explains the focus of the business, the structure, strategy, process and the plans for success now and in the future. It also comprise various assumptions which are variables in the life cycle of the business and help ensure the business is on course.
However, most business plans are not realistic because they are not bankable; hence the reason why all the contents of your business plan must be detailed. Not only will you be able to attract funding from individuals and financial institutions, but your business can grow through a dynamic market.
Importance of a Business Plan
You may be thinking your small business doesn’t need a business plan. Well, this is the reason why most African businesses don’t outlive its founder. Your business does not have to follow this tragic trend. So why then is a business plan important to the success and growth of your business:
- To establish milestones. The business plan help you stick with your short, medium and long term operational milestones that are strategic to the success of your business
- To gain a wider, deeper and an advanced understanding of your market.
- It will help you attract and retain top quality employees, plan team, talent and management professionals.
- Your bankable business plan helps you to attract funding from angel investors, venture capitalists and financial institutions. It helps them to see how scalable your business is, as well as your market potential
Most business plans are not realistic because they are not bankable; hence the reason why all the contents of your business plan must be detailed.
- It helps you to leverage on various form of partnerships. It could be partnership based on credibility, finance, knowledge or physical assets/facilities. With a bankable business plan you spend less on your needs.
- Keeping track of your business success with reference to your assumptions and propositions would be made easy
- It makes up for proper assessment of your strength, weakness, opportunities and threat in your industry
- It is your business “manufacturer’s manual”. Every new product comes with a manual which makes it very simple to operate. When you as the owner of the business is not there, the business can run, because the business plan brings system, process and structure into your business, not making it an occupation that requires your presence at all times.
I believe by now, you know the importance of a bankable business plan to your business success. Let me guide you on how to write one!
Contents of a Bankable Business Plan
The Cover Page:
You must provide a cover page for your business plan which outlines your name, your business name, business contacts [address, phone numbers, email address and website (if you have one)] and a business logo. You are also encouraged to include a brand slogan for your business if you have formulated one.
This is a summary (or a snap shot) of all the contents of the plan. It should be written in such a way that anyone reading it would have seen the core or essence of the plan. The Executive summary should cover every section from Introduction to the Milestones
Here, you need to write your overview first, which means that you need to describe the business, state the progress so far made and what has spurred you into taking the next steps for which you are writing this business plan. Furthermore, you need to write your vision and mission statements, your objectives, goals and value proposition.
Describe the product and/or service you are producing or you will produce to deliver the value proposed to customers. Include illustrations if necessary.
Industry and Market Analysis:
State the industry/sector of the economy in which your business is playing. What are the peculiarities of the industry that make it viable or demonstrate growth potential, the actions of government that support the growth of the industry, the market you intend to serve, the major players in the industry, the size of the market (volume and value, where possible), and the segments of the market.
State your major (direct and indirect) competitors describe their services. Explain your advantage over them as well as how you plan to retain customer loyalty.
This section talks about your strength, weaknesses, opportunities and threat in your line of business.
The licenses/permit required for your business to operate, the material and human resources needed, mode of delivery to your customers, your expected suppliers, distributors and key agents. You need to explain your expected mode of relationship with them.
This covers how you will create awareness about your product, your pricing strategy, method of promotion, channels of delivery, provision of incentives and how you will ensure that your credit customers pay.
Your business plan should describe the peculiarities of the industry that make it viable or demonstrate growth potential, the size of the market, among other things.
This describes the function and qualification/expertise of your staff as well as the organizational structure. This structure shows the coordination and relationship lines between and within the functions.
Key Assumptions on cost elements, current and future costing, financing options and revenues projections. Remembers that it is prudent to underestimate your revenue and anticipate more in costs. Add important milestones. State what you need to achieve every quarter for the next 2 years. Avoid bogus, exaggerated or unattainable milestones.
The process of developing a bankable business plan may be rigorous, but I bet it with you that, it is a need that your business can’t do without on its pathway to success.