According to Wikipedia, a business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organization or team attempting to reach those goals.
Business plans may target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their investment return in that timeframe.
A business plan is necessary even for a small organisation for the following reasons:
• Internal Purposes:
– A structured plan for your business which entails each person’s roles.
– Specified short-term and long-term targets
– It can also serve as a method of evaluation as the entrepreneur can strike off stuff that’s accomplished.
– Helps with the planning process
– Can be edited as the company grows
• External purposes
– To present to banks and other investors for investments
– A document for the statutory agencies
– Helps in attracting business partners
– Attracts key employees
Related Post: How to use a sample business plan to write your own plan
A comprehensive and detailed business plan should consist of the following parts:
• Executive Summary:
The executive summary is not a preface or an abstract but it is a concise version of the business plan itself. It should explain the contents in brief so that the viewers are aware of what’s coming up.
• The Company:
The next part should speak about the company itself. A good business plan should contain your big idea and how it is going to benefit people. Also, any specifications or developments of the product/service should be mentioned in this part.
This part should also speak about the background, current status and the estimated future concisely.
• The management team:
It is essential for the investors or proposed alliances to know about your team. Include the qualifications and the skills possessed by the head and some experienced employees in the team. Including the financial status and the knowledge about the market in this part is also a good idea.
Related Post: Five critical questions your business plan should answer
• The industry & the markets:
This part is self explanatory.
For instance, if you are venturing into the pet market, write about the pet industry and why it is booming. Try and incorporate the psychographics of the market you would be catering to along with the major competitors in the same market.
This part of your business plan should comprise of a chart of milestones and dates and also cover inputs required for the business to run. Also, it must take into consideration cash-flow & people related plan.
• The marketing & sales plan
This segment should cover the target market you are aspiring to approach along with the pricing strategies and coverage plan of how you’ll reach them using different marketing tools– social media, personal selling, ATL ads etc.
Include the periodic sales and the collection methods as well.
• Financial plan
This is the most important part of your business plan. It should comprise of the point you will most probably reach a breakeven point (total revenue=total costs incurred). It should have properly structured and supported data about the investments made till now and how much more you’re expecting and how you’d use those financés.
• Risk & Contingencies
This fraction of the plan shows your deep thinking and research done by you and should encompass the financial and other risks one is undertaking.
Related Post: 8 Common business plan mistakes
This is an optional segment but it’s better if you have an appendices. It can consist of CVs of important people, Gantt charts, references, projected profits and losses, cash flow, the balance sheets and important documents such as land acquisition, raw materials etc.
You can find sample business plans here: