So you want to start a business and every piece of information you are receiving has the word ‘business plan’. Or you are trying to get funding for your already running business and you keep getting the question ‘Do you have a business plan?”
When starting out in the business world, the term “business plan” can sound ambiguous, and the thought of it can be stressful. It feels like being asked the ins and outs of your business idea from start to finish. However, it doesn’t have to be ambiguous. In simple terms, a business plan shows what your business plans to achieve. What problem is it solving and how are you planning to solve it? Your business plan is a roadmap, showing the future of your business.
“I had a business plan before I had my food joint up and running. Not necessarily to get funding, as many businesses do but as a guide on how I was going to run my business.” Brian Makori, owner of Whispering Bamboo.
A business plan acts as a foundation for your business and helps you run your business more smoothly. It acts as a guide from starting your business to managing it including some of the important aspects of running a successful business such as financing, marketing, operations, and even competitor analysis.
Adapting your business plan to the business changes
One important thing to note is that as your business grows and changes, your business plan changes with it. You have to adapt to the needs of your business and, more importantly, the needs of your clients. Mr. Makori notes that his business plan had to change to adapt to the needs and wants of his customers.
“My business plan helped me as I started. My plan was to sell fast foods only but the more customers I had, the more they asked for other foods. I had to adapt my business plan to this change. The important thing for a business is to adapt to the changes in the market”
A practical business plan breakdown
Business plan components may differ from design to design. However, there are 5 elements that are basic for any business plan. All you need to do is tailor your business plan to your business, what your business is about, and how you want to run your business.
1. Your business’ summary
What is your business about? That is where it all starts. What services or goods are you offering the market? What gap are you looking to fill with these products or services? Who are you targeting in the market to use your products or pay for your services?
This does not need to be 1000 words. Keep it as short as possible especially if a financier needs to go through your business plan when you are looking for funding. Nobody wants to go through a whole document of what your business is about.
2. Who is your competition?
You know what you want to bring to the market and who you are planning to sell to. The next thing you need to look at and understand is your competitor(s). Similar businesses offering similar products or services should be a ‘priority’ to you with the question of how different you will be from them.
This calls for intensive market research. Find out who the most successful players are in your industry and what makes them successful in terms of service or product offering, best pricing, superior service, or product.
Consider the location you are planning to set up your business and see if you have competitors in that location. Whether it’s a physical location or online, see what they do and how they do it. This way, you will be able to see where you can fill a gap and how different you can make your business.
3. Marketing your business
The next important aspect you need to figure out is how you will make your business reach the people. The starting point is a positioning statement which is a statement that outlines the advantages of your product (goods or services) for your target audience as well as how you stand out from your competitors.
How will you make sure that the goods or services you are selling reach the right market?
You might not have prior experience in marketing, but you will need to find a way to market your brand, whether it’s through hiring someone to do the marketing for you or learning on the job.
There are different ways to market your business and this is where you figure out which marketing strategies to use. With social media, this is always a good start as the world has tremendously moved to digital. However, of importance is going where your people are. Where your target audience is, go there, invest your budget and marketing strategies there.
4. Your Team
You have definitely heard that people make a business.
Who are the people your customers will interact with in your business? Whether face-to-face in your store or online, as a business owner, you need to know the people who will be the face of your business. What individuals do you have or need to employ? Describe the experience, skills, and qualities they need to have to make your business a success.
The success of the majority of enterprises still ultimately depends on people. Ensure that you have the right people serving your business. Importantly, have people who adapt to your brand and are passionate about seeing your business grow.
Now it is all about the money matters. If you have some financial skills, you are lucky. Here, you should present the data that supports what you said in the business summary and marketing parts.
If you’re a start-up, your business plan needs to include cash flow projections, at least the first year’s financial statements, and start-up expenses ( business registration, etc.). These numbers are intended to show that you have a plan for getting where you’re going and how you’re going to get there.
Include three-year predictions that are realistic for your balance sheet, cash flow statements, and profit and loss statements. These are not your present accounting outputs; rather, they are predictions for the future.
Even if you never intend to pitch to investors, a business plan may help you define specific, intentional next steps for your company and can also show you any gaps in your plan before they become problems.