How to create an effective business plan-
To create a business plan is one of the most important things that you will do with starting up
. It will help you to determine whether you gain funding from potential investors, and it will help you to clarify your business objectives and direction.
How to write an effective business plan-
Before you begin writing -
Before writing a business plan, you will need to consider what information you need to assemble, the initial decisions to be made, and the sales and marketing options open to you.
After that, assess the expertise and the assistance that you already have and decide the additional help you will need to prepare your plan and harness your resources effectively. For example, you might need accountancy or marketing assistance
Most importantly, you need to examine and analyse your business critically, and also check these against your initial perception of the marketplace. Get a SWOT' analysis on your business, and watch out its Strength and Weaknesses, considering the open opportunities along with the Threats you face.
Your marketplace is the key to the success of your business. You should review the market for your goods or services, and the competition you face. In order to identify potential segmentation, you should use market segmentation, and market survey methods to characterize your customers and their needs.
Presentation is one of the most important parts of your Business Plan as it represents your plan to your financiers, and influences them to make an investment on your plan. Take this into consideration that the length of the business plan should be short enough to maintain the interest of any potential investor.
The presentation should be professional and clear, with graphics and charts where appropriate.
Essential ingredients that needs to be taken care of-
Your business plan should Include:
1. A business description and mission statement.
Every business needs a clear declaration of why it exists, and a basic description of how it intends to meet its primary objective. Provide a brief history and then explain what it does, identify the marketplace niche it fills and assert why you and the business will succeed. You may also wish to reveal why your business chose its location and how you will benefit the local community.
2. Management and people profiles-
Provide an outline of your organizational structure and management team, giving solid reasons why you and any colleagues are competent and can deliver results.
3. A financial portrait and strategy
Prospective investors and lenders need a good idea
of the financial aspects and potential of your business. Include projections of basic data such as a projected balance sheet, a profit and loss account and an analysis of cash flow. It is important to be as accurate as possible. E.g. ensure your numbers demonstrate that you and your management team have considered the key 'drivers' that will determine your success or failure.
Don't fill the business plan with overly optimistic financial projections that could ultimately depict your business in a bad light.
4. Sales and marketing objectives
Describe your intended market, giving specific details on its size and how much of it you intend to serve. Define- what's your market's growth potential? What specific geographic and economic factors play a role?
Competitors are the crucial factor, playing a vital role behind the success of yours'. Name your largest competitors and explain why you can serve your market better than these rivals. Do not conceal your weaknesses: recognizing the challenges you must overcome shows that you are realistic.
5. An executive summary
An executive summary shows the highlights of each section of the business plan, providing a clear synopsis of who you are, what you do and where you're heading.
One should also be very careful to avoid some common pitfalls, such as -
1. Over-optimism - Most business plans are over-optimistic, especially as regards predicted sales, often massively overestimating the size of the market. Research your market thoroughly. Too many business plans include a SWOT analysis, but concentrate on the strengths and opportunities and ignore the threats and weaknesses.
2. Ignoring the competition - Study your competitors and try to anticipate their plans.
3. Ignoring risk - What are the risks attached to the plan? Think through these and consider the costs of failure as well as the rewards of success.
An ongoing process
Writing a business plan is an on-going process, and not to abandon or forget about your business plan after you've presented it to investors. Your business plan should adapt to your company, its market and the economy - and that means regular reviewing and updating.
Creating a business plan open up the plan with the realities of business. Keep it updated, and help yourself to stay on right track.
How to create an effective business plan-
By: Accountancy Champs
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