how to create a business plan

how to create a business plan

Creating an Effective Business Plan

1. Introduction

Your business plan is a roadmap for your enterprise. It can describe what you do and how you’ll do it, help you analyze the marketplace and your competition, and tell you how much money you’ll need to get started with your business and keep it running. A well-conceived plan can be an invaluable tool in determining whether your business has a chance of success and can be used to persuade investors or lenders of your worth. Anything worth doing is worth doing well – so start off your business planning process right, with a plan that has a clearly defined goal, who the plan is aimed at, and what you hope to achieve from it. Think about what you want to accomplish with your plan. Is it to give a blueprint to start up or run your business? Is it to define where you want to take your business and to measure the progress of what you have achieved? Do you have an idea of what your business is worth? An answer to these questions and questions similar to these will determine who the plan is aimed at and if there will be a worthwhile return on the time and money invested in creating the plan.

2. Defining Your Business

Defining your business is central to the business plan and to the direction of your company. Defining means how you will describe your product/service to potential buyers and to yourself. This means you should not get too technical, or you will lose the average consumer, but you don’t want to insult anyone’s intelligence with an explanation that is too basic. In the middle of these two types of consumers, you can have very different opinions on a similar product. You should try to gear your product or service to a singular group. This group is called a niche market – a small narrowly defined group of potential and existing customers. By aiming your product at a particular market, you will be more able to identify the needs and wants of your customers. You can start defining your business by brainstorming about what you hope to accomplish with your business or what the vision would be in the future. A good way to put this into a simpler understanding is by doing what is called a SWOT analysis. This stands for your Strengths, Weaknesses, Opportunities, and Threats. You can break these up into four categories. Your strengths and weaknesses are internal factors, things that you have the power to change. Opportunities and threats are external factors – things that are to some extent out of your control but can be swayed in a positive direction with the right decisions. By researching and understanding these four aspects, you can form a clearer picture of what you want to do with your business.

3. Market Analysis and Strategy

It should be mentioned that Awang’s Farm and Nursery is the only nursery that focuses on providing fruit seedlings and herbs and is located in Sungkai, Perak, Malaysia. Other nurseries that provide the same seedlings are too general in providing a variety of seedlings sold compared to our business that specifically focuses on fruit seedlings and herbs. Other nurseries mostly only sell basic vegetable seedlings and flower seedlings. This is because the profit of selling basic vegetable seedlings and flower seedlings is much higher compared to selling fruit and herb seedlings. Besides that, other reasons for not focusing on fruit and herb seedlings are because the period to take care of the seedlings will take about 2-3 months, which is too long for them to take care of the seedlings until they are ready to be sold. This is because basic vegetable seedlings and flower seedlings only take a maximum of 1 month to be sold. Other than that, the location of the nurseries is also one of the reasons many nurseries do not focus on fruit and herb seedlings. This is because not all places in Malaysia are suitable for planting fruit trees and herbs. Tropical fruit trees such as mango, rambutan, durian, and papaya can only grow well in places that have a tropical climate, and Malaysia has a tropical climate throughout the year, which is very suitable for the planting of fruit trees. This also must be proven that our nursery is the best place to get tropical fruit tree seedlings because we have planted the fruit trees ourselves to get better results of the seedlings. In planting herb seedlings, the tropical climate is also more suitable to plant the herbs outside the house. This is because Malaysia has a tropical climate, which means the herbs will get enough sunlight that is needed for the growth of the herb. With good sunlight, it can also reduce the time to water the herb because when it is planted inside the house, it does not get enough sunlight.

4. Financial Planning and Projections

The cash flow statement is a highly important projection. It is the lifeblood of the business, showing the cash and cash equivalents that are moving in and out of the business. This statement will note if there is enough liquidity to carry through the initial investment, the ability to secure more funding if and when necessary, and any potential profits the company has earmarked for future investments in assets. Any negative amounts should ring a warning bell, and the statement should be adjusted accordingly to prevent future losses or the inability to cover expenses at a future date.

The second part of our financial plan is creating a detailed account of our start-up costs. These are the costs that occur during the period from a business’ idea till the beginning of operations, which in our case is the maintenance of the website. They are a prediction of the initial investment required to start the business.

The income statement is a summary of the company’s revenue and expenses over a specified period of time, resulting in either a profit or a loss. Before developing the three-year summary, it is important to forecast sales. This will be done by estimating the potential number of sales and multiplying that against the price consumers are expected to pay. For our particular business, it seems as though niche auctions are not that much in demand on the internet, so we have set a very conservative estimate of 36,000 sales for the first year, 40,000 for the second year, and 45,000 for the third year, increasing revenue each year. Steps will have to be taken if the sales objectives are not met in some given fiscal period. Then, there will be a layout of all expected cash inflows from sales.

Financial planning should be incorporated into the business plan. It is an integral part of business planning. It consists of a series of activities, which includes the assessment of current and future financial needs of the organization, the development of a plan to meet these needs, and the continuous monitoring of the plan to ensure that the organization is moving towards its goals. The areas we are going to cover consist of a three-year summary of our income statement, a detailed account of our start-up cost, a cash flow statement, and the balance sheet for the end of the three years.

5. Implementation and Evaluation

Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals. How do you formulate a strategy for implementation and evaluate it once it’s done? This section talks about the importance of the implementation process to the organisation. During this process, all the experiences which they encounter are learning processes, whether it is success or failure. It is important for the organisation to learn and accept new changes which will better them for a better future. This is done by applying the knowledge which they have learned in their past experiences and do not practice and repeat the same mistakes which they have encountered. This process enables the organisation to think on their feet and be quick in decision making. This is done by setting deadlines on the plans which they have decided and be quick in achieving the goals settled. This process will further enhance the decision making of each employee within the organisation as they will be responsible in their own fields. Each of these changes will enable a more efficient and effective organisation. One of the changes which a company can do is changing the structures in the organisation from functional to cross-functional. This is because the changing business environment today, the company will need to be quick in responding to changes and working as a team is very effective in decision making and implementation of these decisions. By working as teams, employees from each of their respective functions will be able to understand what is happening around them and make decisions together. This will enable a united decision which might affect the whole organisation. The decision making to switch to cross-functional teams will be easy but the tough part is to have these teams understand the tempo changes from their past functional work and be able to have good teamwork. By this exercise, leaders within the organisation including the CEO will be able to evaluate the change and see if it has impacted the improvement of the organisation and it is a good example to be evaluated.