Business planning is one of the fundamentals of entrepreneurship and is critical in any industry to ensure long term success. However, many fail to realize the difference between a business plan and a business model.
A business plan tells the story about your business and what the future holds for it while making its case. On the other hand, a business model has all the information from accountants, bankers, consultants, and analysts to make the business plan a reality. An effective business plan has to be unique and should reflect the views of everyone that is going to be involved in running the organization. Let’s go through the basics of building an effective business plan that can help you achieve your organizational goals!
Who We Are – About the Company
This is the first section of a business plan and is very important to ensure that you raise the capital successfully. Start with the name of your company and what you specialize in. Explain the services that you provide and what geographical regions you cover. This section should be as clear as possible because this is the face of your business plan.
What We Want to Do – Our Mission
What are your immediate, short term, and long term objectives with your business? This section should be more detailed than the first one because you want to mention everything that you want to achieve with your business. Make sure that the missions listed are realistic and achievable with the capital you expect to raise.
What We Provide – Products/Services
This section is often misunderstood any many businesses believe that only listing their products and services will do the trick. Well it won’t, especially if you are entering a market that is already loaded with similar products and services as yours. Rather than simply stating what you provide, explain what makes you different. Use words like faster, better, easier, cheaper, comprehensive, etc. Highlight what makes your products and/or services different because that is what’s going to make your business plan ‘sell’ to investors.
How We Provide It – Production, Operations, Marketing and Distribution
So your investors know that what products and services you provide, but do they know how much time and capital you need to make those products and services? This is a key feature in your business plan that will either impress the investors or will give them cold feet. Break down the costs of making those products and services, how much investment you need to produce your targeted number of products or targeted services. Be very clear about the operations, sales, marketing, and distribution aspects as they will all contribute their fair share to the investment.
When We Will Breakeven – Monetary Objectives and Conclusion
If the investors have made the effort of going through the whole business plan, then this section is where your business should be able to lock down that capital. Clearly explain how you anticipate initial sales against costs and expenses. If possible, include a chart that gives a month by month or quarter by quarter breakdown of sales, costs, expenses, and net income/loss. In the end, mention the time you anticipate your business to breakeven and give a non-biased conclusion. If all the elements stated here are followed, then what you have is an effective business plan that can win over investors sooner or later!
