Business Plan Writing
Business planning is crucial in ensuring the success of a company. In business, recognizing the key elements to affect the future success of a business is a primary necessity. There are seven critical elements to affect the future success of a business and these include major causes of business failures, ultimate business vision, critical strategies, goals and action plans, organization and management, marketing plan and business key operating indicators. Every new venture should start with assuming the business would fail and confirm the reasons of business failures. Therefore, what’s discovered can be turned as the most important learning opportunities. Ultimate business vision is important to develop a ‘big picture’ of the direction and purpose of the business to ensure it could continue to stay engaged and headed towards intended goals. In addition, the critical strategies have to be identified to effectively and efficiently leverage the operations for the company. The difference between mission and goal is mission is what’s to be done present and goal is something to shoot for in the future. Also, a clear business organization and management plan is desirable. Investors are more interested in the governance of a business and the strategy rather than the actual product. As it’s important to make a business successful, every new business needs a clear and concise marketing plan. A comprehensive marketing plan identifies the missions and goals of a business, careful research on competitors, and concludes with the most suitable marketing strategies. A good analysis of business key operating indicators can help ease the process of managing and keeping the business on the right track for operational success. It’s important to ensure the organization continues to move well on the way to the ultimate business vision. Business key operating indicators provide small business owners a complete snapshot and indicate the company’s financial health. Concentrating on an easily understood set of metrics is a powerful tool to gauge the success of a business and to aid the company in maintaining a positive growth. Also, business key operating indicators can change from month to month and are based on the business activity. For instance, the company’s daily cash sales figure provides a valuable business key operating indicator and it helps show the cash flow of the business. Also, the number of customers served each day is a useful indicator of the company’s productivity level. And in order to get a more accurate business key operating indicator, an effective and good strategy in managing and planning the buy cycle for each customer is necessary as it can help to smooth the business demand.
The executive summary is the most important part of a business document. It is the first and sometimes the only thing others will read and the last thing you should write. It is a concise summary of the entire contents of your business plan. Although it comes first, be sure to write your executive summary last, so you can condense the whole business plan into a few paragraphs and fit it onto the front page! The purpose of the executive summary is to give an outline or overview of the main points that will be covered in detail in the rest of the plan. It should contain the main findings, the recommendations and an introduction to the marketing strategy and any other plans that will be discussed in the main document. It is often the only part of the document that many people will read, so make sure that you provide a full and comprehensive account of the whole plan, rather than just a taste of what is to come. You should draw together the main elements or reasons for the plan in a brief and generalised form. You need to keep the information in the executive summary to key facts. All decision makers who may have to approve the plan in a meeting will have only a limited amount of set-aside time, which will be taken up mainly with both the oral presentation by the plan’s presenter and discussion. Do not use jargon or too many technical terms in the executive summary. You can refer to things that will be explained later in the presentation or in the main body of the document. Keep the language simple and the tone informal. Try to interest the reader in your plan, but also show them that you understand what you are doing and that you have thought carefully about the risks and benefits of your business idea. Use persuasion rather than pressure to encourage the reader to take an interest in your plan.
Your company should impress potential customers with your service or product. Who are your customers and what are their needs? You need to demonstrate that you know and understand the market and how market trends and conditions may change over time. Start with an overview of the market – using trends, statistics, or other relevant information to introduce the market you are entering. Show you have done thorough research of the industry. Use graphs and charts in this section to visually demonstrate the recent and forecasted market growth, market trends, and other relevant information. The idea is to help the reader understand the market in which you are entering, and also enable them to see the proof in the proverbial pudding. We will look closely at the competition before we move into the final three sections. You will need to provide a detailed analysis of the industry including sales forecasts for the products you will sell or distribute. The competition analysis is a statement of the business strategy and how it relates to the competition. It is important to display the unique characteristics of your company and show how you are better than all your competitors. Finally, it is very important to consider the following, as customers are key and competition is everywhere nowadays. Describe who your customers are individually. If you are marketing to customers who already have a product or service make sure you make the best use of the research used – show the results with pictures and lessons learnt on the way (this will be useful for the “market targeting strategy”) and spend time to explain the unique characteristics of each customer. This could involve strategies such as one example per paragraph. Also justify why you chose that particular segment. Demonstrate positive quantitative data and demand forecasts (percentages and numerical data such as number of sales or popularity). Use pie charts and bar graphs to represent the statistics. Use sources of information such as government publications, trade magazines, newspapers, TV news research reports and books. Also use results of any surveys – are there any published data? Avoid using jargon and sold obscure by the use of visuals. Use properly labelled and sized visuals to enhance the understanding. It is also important to state the strengths and the weaknesses in your market. This can also include opportunities and threats and SWOT analysis is a useful method of explaining these. The idea of this section is to create a better understanding of your company as a ‘going concern’ and demonstrate the areas in which you can maximise the success that it has to offer. Also this can often be used as an on-going reporting tool – i.e., it is updated regularly and can be used as a measure of performance and used by stakeholders and financiers to forecast future performance. With this in mind you must show a strong knowledge of the industry – you must display an understanding of your product or service and the needs of the market and your most customers and you must be able to show growth and sustainability but most of all you must be persuasive!
It entails how best an organization can strategically achieve its objectives. Focus is mainly on the business strategy. Here, an individual is required to outline the foreseeable and objective measures to be employed in realizing the stated goal. A well-detailed business strategy helps to expose opportunities and challenges, and craft concrete measures to face them. In the business strategy, it is good to be clear in as far as the set or planned strategies are concerned. Depending on the nature of the entity, strategies may differ in their meanings, content or extent of focus. It is also a cliche in business writing that each entity will have its own unique business strategy. However, a common practice is that the entire strategies will be grouped in terms of either of the following: strategic, tactical or an operational focus. In the practical business world, the usage of ‘operational’ to mean daily activities is synonymous with business plans. Therefore, a practical business strategy shouldn’t focus too much on such short-term issues or planning. The strategies need to have a medium to long-term view; a minimum of a year’s timeframe is suggested, and relevance to the strategic focus regardless of the department. It is of essence to involve senior staff such as the business owner, divisional directors or heads of departments in the strategy formulation. This does not only yield the much-needed commitment and acceptance, but it also benefits from additional input. This is because the seniors who have been involved in the practical day-to-day running of the organization have a big impact in terms of knowing the strengths and weaknesses. Senior staff input in the business strategy can be well achieved by attending a series of strategy workshop sessions, which are chaired and facilitated by the operations director and any other independent business development expert. The outcome of the workshop is a clear, coherent and written strategy in its first stage ready for approval by the board of directors. However, such strategies must be reviewed and updated on a regular basis to accommodate the dynamism of today’s business world. The business strategy update can be just a partial amendment of one offered for a maximum effective period of one year or at least two years before a comprehensive review is carried out. It is always important to stress that the given strategies are not to benefit the department heads or the senior staff, but to serve the best interest of the organization and its clientele. This becomes very critical if at all the strategy in view has got a bearing with public interest or social responsibility. No profits should be gained at the expense of health of the workers, safety of the clientele or endangering any member of the public. A good business strategy should reflect customer’s satisfaction as well as long-term and short-term interests of the stakeholders. Such strategies should de-emphasize the quest for monetary gain without critical evaluation of the social implications that may provide bedrock for criticisms and potential law suits. Therefore, the planning should be based on ending up with a sensible, logical, clear and focused strategy. This requires the continuous retrieval of data from various sources and forming options; marking out the changes in trends or new technologies and obviously identifying the key determinants of success. Ergonomics and cost-benefit analysis are also important depending on the nature of the organization and the industry in which it operates.
In this section, the writer must translate the described product or service in terms of a dollar amount. This can be developed and supported by calculating the potential monthly or yearly profit and comparing the potential profit to the initial set up cost to give proof of a solid investment return. This section also can include graphs to visually demonstrate the potential profit. This section begins with an evaluation of the average earnings per sale and other pricing evaluations. This section should utilize visual aids, wherever possible, to improve the potential for a clear and easily understandable representation of the profitability of the venture. Next, the writer should analyze the advertising plan. The writer should demonstrate a clear understanding of who the target market is. This can be introduced with a summary of the demographic for this particular product or service. The financial section of the business plan is the most flexible and the most important section at the same time. In this section, the writer needs to translate the statistics and descriptions into actual proposals. The section can be broken down into four panels: investment, revenue, expenses, and profit. The sum investment is defined as the period of time when the operating budget exceeds the revenue. The average amount of money that is falling into this category is described as an ‘investment’. This section should include a pie chart and a bar graph, showing expenditures and comparing the initial set up expenses to the first year cost. Secondly, the revenue from the previous years should be accurately displayed and analyzed. The writer can use either a graph or a line chart. Then, separate the expenses into two categories: cost of goods and operating expenses. Operating Budget should be presented as a Gantt chart. Next, the potential profit from a successful business is discussed. The writer should include a minimum of two years profit. The potential for long-term profitability can be superimposed by increasing the sales and/or reducing expenses. A formula for profit percentage can be market and a new business could strive to match or improve the industry average cited.
