There
is an old adage that says, “If you fail to plan, then you are planning to
fail”. This saying has been attributed most often to Ben Franklin, who is also
credited with having said, "By failing to prepare, you are preparing to
fail.” More recent variations, along with their attributions, include: “Fail to plan, plan to fail.” Carl W. Buechner,
“Failures don't plan to fail; they fail to plan.” Harvey MacKay, "He who
fails to plan is planning to fail." Winston Churchill (during WW II).
These
saying apply to every aspect of our lives. On the business front, what it
literally means is that , if you start or run your business without going
through the process of business planning to develop a feasible business plan
then you are planning to fail in that business . This is the major factor why
most start-ups easily fold up some few months after launching their services.
The business plan document in itself is not the important thing here, but going
through the business planning process alone is of much importance than having
the document.
In
this article we shall learn how about the step by step process for building a
credible, defensible, and feasible business plan, which will serve as the
compass or roadmap for your business.
The Business Plan
The
business plan is a summary of how an entrepreneur, business owner, or manager
intends to organize an entrepreneurial endeavor to implement the activities
necessary and sufficient for the venture to succeed in attaining its
prioritized goals and objectives. It can also be defined as a written
explanation of a company's business model or the document used internally for
management and planning and also used to convince outsiders, such as banks or
venture capitalists, to invest money into a venture.
A credible and defensible business plan must have
continuity and integrity throughout the entire document. Financial
documents must reflect the decisions made in the Organizational and Marketing
Plans.
The
Business Planning Process
The major parts of a business plan are;
Cover
Sheet: This page contains the name of your business, logo, address, date and the
recipient of your business plan.
Statement
of Purpose: This page contains the reason why the business plans is been
drafted.
Table
of Contents: Contains the various sections of the plan and their respective numbers.
Executive
Summary: The Executive summary is always the last part of the plan that is
drafted but always appears before the plan begins. It provides a snapshot of
the various sections of the plan.
Organizational
Plan: Under the organizational plan, it contains the summary description of the
business or organization, products or services to be provided by the company,
focus on the intellectual property rights, location of the business which is
not only tied to marketing but the physical evidence, the legal structure of
the company, as well as the management, personnel, accounting and legal related
issue governing the business. This section also focuses on the risk and
insurance issues as well as security.
Marketing
Plan: The marketing plan gives an overview, objectives and goals of the
marketing strategy to be employed by the company. This section delves into the
market analysis, thus Target market, market niche, competition and the industry
trends. Under the marketing strategy, you are supposed to talk about your
distribution, packaging, pricing and branding related issues, as well as your sales,
promotions, advertising, public relations and networking strategies. Your
customer service and care issues must also come under this sector. However, you
will have to factor in how you will implement the various strategies and how to
assess the marketing effectiveness.
Financial
Documents: This is the quantitative part of the plan. Under this section, you will
focus on the sources and uses of funds, the cash flow and its analysis, pro
forma financial statements, historical financial statements.
Supporting
Documents: You will need to add some supporting documents like your
personal financial statements, credit reports, reference letter, location
analysis and legal documents like leases, contracts, and agreements. You must also remember to add records that
support statements and decisions made in the organizational, marketing and
financial plans.
Note the following:
• As you venture out into the marketplace or
business, you will constantly be asked if you have a business plan.
• Do consider your plan a professional document
and be prepared to be credible, concise, and detailed.
• This document should boost investor trust in you
and help you in any sales pitches you may have to make.
