A business plan is a written explanation of the future of your business. There is no need to make it more complicated. It is document which describes what you plan to do in the company as well as how you are planning to do it. If you write down a paragraph on the back of an envelope which describes your business strategy, you’ve penned a plan or at least the kernel of a plan.
Business plans can assist the business owner with performing several tasks for those who write as well as read them. These plans are used by investment-seeking entrepreneurs in order to convey their vision to potential investors. In addition, a business plan may also be used by firms who are attempting to attract key employees, look for new business, deal with suppliers or merely to understand how to handle their companies better.
The nitty-gritty of a business plan
Stated simply, a business plan communicates your business goals, the strategies which you’ll make use of to meet these outcomes, potential challenges which may confront your business in addition to ways to respond to them, the organisational structure of your company (including titles and responsibilities), and lastly, the amount of capital which is required to finance your venture and sustain it until it breaks even.
A substantial part of your business plan consists of your financial statements. These statements are formal archives of your business’s financial activities. Financial statements provide a summary (short and long term) of your company’s financial condition. The four primary financial statements are the following:
- Income statement: Your bottom line which is calculated by subtracting costs from revenue in order to calculate net profit
- Balance sheet: This is a financial snapshot which shows what you own, what you owe as well as what your company is worth
- Cash flow statement: This statement follows the flow of cash in and out of your company
- Budget: This financial statement is your financial forecast that indicates where you plan to make as well as spend money
The sections of a business plan
A business plan is a roadmap for survival which looks at your company at the current moment (by understanding your surroundings) and then takes a look into the future. Your business plan will assist you with preparing if you include these basics:
- Plans: Business mission, vision, goals as well as objectives that all work together.
- Organisation: A structure for your business which makes sense
- Procedures: Efficient as well as effective ways of doing things
- Leadership: An ability to influence as well as encourage others around you
- Skills: The talents in addition to expertise which your people need to succeed
- Culture: Beliefs and attitudes that result in doing the right thing
Two critical mistakes while designing your business plan can cause your new business to fail: skimping on research and a lack of preparedness. Avoid becoming a failed business by making sure you don’t commit those mistakes as well as the following:
- Lack of a long-term company vision
- Failure to establish clear goals and objectives
- Misunderstanding what customers want
- Underestimating the competition
- Inadequate financial planning
- Lack of strong leadership
- Ineffective procedures and systems
- Absence of critical business skills
- Inability to change
- Failure to communicate the plan
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