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| Business Planning |
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The benefit of business planning
We all have an aversion to doing anything on our job that doesn't immediately help the situation we're now experiencing. However, isn't it also true that a little foresight and action before the fact can help eliminate many of the problems we face everyday? Of course it would. And with that anticipation come an organized and effective response. Additionally, we prepare a workable business plan to
- Determine where the business needs to go.
- Anticipate possible obstacles along the way.
- Formulate strategies to contingencies.
- Keep the business on track.
The basic of a business plan.
A business plan is a written description of your business's future. A document that describes what you plan to do and how you plan to do it. It's used by entrepreneurs to convey their vision to potential investors or venture capital. Business plans may also be used by companies to attract new business, or simply to understand how to manage their business better.
Simply stated, a business plan conveys your business goals, the strategies you'll use to meet them, potential problems that may confront your business and ways to solve them, the organizational structure of your business, and the amount of capital required to finance your venture and keep it going until it reach its projected profit.
There are three primary sections to a business plan:
- Business model section, where you discuss the industry, your business structure, your particular product or service, and how you plan to make your business a success.
- Marketing section, where you describe and analyze potential customers: who and where they are, what makes them buy and so on. Here, you also describe the competition and how you position yourself to beat it.
- Financial section, which includes your income and cash flow statement, balance sheet and other financial ratios, such as break-even analyses. This part may require help from your accountant and a good spreadsheet software program.
The key components of your business plan may varies depending on the phase and nature of business, or on the requirements of your potential investor, a business plan generally consists of 7 components:
1. Executive summary
2. Business description
3. Market strategies
4. Competitive analysis
5. Design and development plan
6. Operations and management plan
7. Financial factors
In addition, your business plan should also have a cover, title page and table of contents.
The importance of executive summary.
The executive summary is potentially the most important section of your business plan. An executive summary should briefly describe the company, the product or service, and the unique opportunity your company is offering. It should also provide a short description of your key management team members and an outline of the investment you are seeking. Don't forget to tell the reader why you need the money and how and when they can expect to be paid back!
A good executive summary is essentially a condensed but powerful summary of your entire business plan. It creates a first impression in your reader's mind of both you and your business. Use words that get your reader excited about the opportunity you are presenting. Remember: investors are searching for evidence that justifies the soundness of your business idea.
The following excerpt is from David Gumpert's book, How to Really Create a Successful Business Plan . His insight clarifies the importance of a powerfully written executive summary:
Certainly the most significant part of any business plan is its executive summary. What is an executive summary? Probably the best way to begin defining it is to explain what it isn't.
The executive summary is not an abstract of the business plan. The executive summary is not an introduction to the business plan. The executive summary is not a preface. The executive summary is not a random collection of highlights.
Rather, the executive summary is the business plan in miniature. The executive summary should stand alone, almost as a kind of business plan within the business plan. It should be logical, clear, interesting - and exciting. A reader should be able to read through it in four or five minutes and understand what makes your business tick. After reading your executive summary, a reader should be prompted to say, So that's what those people are up to.
Limit the length of your executive summary to no more than 2 to 3 pages and stick to the facts. If your executive summary is clear and concise, you are one step closer to impressing your reader, and on your way to a terrific business plan.
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