Why Do You Need a Business Plan?
A Business Plan refers to a written guide or description of goals of the businesses. Generally, it is used by investment-seeking entrepreneurs to communicate their vision to potential investors. It provides you an insight on how you can manage your business and can make it a success. In a nutshell, it’s a description of your business future.
Therefore, in this blog, we have put the lights on the various aspects relating to a Business Plan such as
- The necessity of a business plan,
- The key factors included,
- When it is required and more.
Reasons why you need a Business Plan
You indeed require a business plan (BP) if you want to remain competitive in the business world and look for constant growth. It doesn’t matter whether you have started your business just a few days back or you have been running it for quite a long time, having a good business plan in place is always a key to any business’ success.
There could be a plethora of reasons why you need it. Some of them are as follows:
Defines the goal of business
It is one of the most crucial aspects of any business. A business without a defined objective is just like a person moving in the forest without a map with no surety of where the path could lead to. A business without a plan can never succeed because the people working in the organization will never get to know why they are working and what objectives they are supposed to achieve.
Lets you see the clear picture of your business
When you plan your business right, you get a clearer and better picture of your business as a whole. The strategy is supposed to relate to plans with strategic alignment. You get to know-
- Whether your sales connect to your sales and marketing expenses?
- Whether your product is apt for your target market?
- Whether you’re able to cover costs including long-term fixed costs, product development, and working capital needs as well?
Influences potential customer
Business set up is wherever start-ups display their potential for success in a simple comprehensible presentation that private equity investors, bank executives, and others would understand easily.
Helps you get finance
If you require finance for your business, then you must convince your investors or bank why they should invest in your business. And for the same, you need to have a great business plan which must show that:
- You’re quite serious about your business;
- It can help investors to understand your business idea; and
- It can start creating huge profits after some time.
Provides innovative business insights
Business plan consultants have intensive knowledge of business strategies, and hence, they are able to provide innovative business insights that can help you do something unique and better. A correct BP always helps you stay ahead of your competitors.
Gives you complete control over the business
With a powerful plan of your business, you get complete control over your business because you know what is correct and what is not. You have an idea about where you need to work so that you can improve.
Lets you be accountable
If you plan effectively, you set expectations for yourself and a means by which you can track your results. You can uniformly review your plan in terms of what you expect and what ultimately happens.
Essentials of a Business Plan
A formal plan must include the following factors or key elements:
- Revenue plan: Every company’s ultimate goal is to generate revenue, and that’s what a revenue plan provides. It acts as a framework for generating revenues and lets entrepreneurs to discover what value to offer, which revenue source to pursue, who pays the value, and how to price the value. Hence, well-designed revenue can help with increased ROI (Return on Investment) and ultimately take your business to next heights.
- Operations and management plan: The operations and management plan represents how your business operates on a continuing basis. The operations plan highlights the logistics of the firm such as the tasks assigned to each division, several responsibilities of the management team, and capital and expense regarding the operations of the business. In reality, the operation plan helps entrepreneurs to develop the next set of financial tables.
- Competitive analysis: A competitive analysis is a significant part of any company’s marketing plan. With this analysis, one can establish what makes the product or service unique. And hence, what attributes you play up to entice your target market. Competitive analysis lets you discover the following:
- Who are your competitors in the market?
- What products or services are they selling?
- What are their past and current strategies?
- What are the market shares of each competitor?
- What media do they use to market their product and services?
- What are the strengths and weaknesses of each competitor?
- What potential threats do they pose?
- What potential opportunities do they make available for you?
- How many hours per week do they purchase to advertise through the media used in this market?
All these will help you to achieve a competitive edge in the market. Hence, a competitive analysis is highly crucial for your business.
- Executive summary: An executive summary, also known as management summary, is a brief description or section of the document produced for business purposes that summarizes a longer report.
Generally, an executive summary is considered the most valuable part of the business plan. It is often written last after the complete plan has been finalized. It covers the highlights of all the other sections.
- Business model: A business model is a company’s strategy for generating revenues and making a profit. It describes what products or services the business intends to manufacture and market, and how it plans to execute it, including what expenses it will incur.
- Marketing strategies: These are the results of the diligent market analysis. Basically, a market analysis pushes the entrepreneur to become familiar with all aspects of the market so that the target market could be defined and the company can be positioned to garner its share of sales.
Market analysis also empowers the entrepreneur to establish promotional strategies, pricing, and distribution to enable the company to become profitable within a competitive environment. Additionally, it provides an indication of the growth potential within the industry, and this will let you develop your own estimations for the future of your business.
- Technology & product plan: Today, the world is quite technology savvy. And why not? Technology has helped businesses make a drastic change be it marketing, sales, targeting and following-up with customers, etc.
And talking about product planning, it’s a method of creating a product idea and following through on it until the product is launched in the market. Product planning involves handling the product throughout its life practicing various marketing strategies, including product extensions or improvements, increased distribution, price changes, and promotions.
- Financial Projections: It’s an estimation of future revenues and expenses. Typically, a financial projection will account for internal and historical data and will incorporate a prediction of external market factors. Generally, you will require creating both short and mid-term financial projections.
- Business Valuation: It’s the process of determining the economic value of a business or company. A business valuation can be utilized to analyze the fair value of a business for several reasons including sales value, establishing partner ownership, etc. The business owners often convert to professional business valuations for the purpose of estimating the value of the business.
- Investment offerings: It’s a document furnished by the sponsor of a new investment project or the management of an existing company, for prospective investors and/or lenders. An Investment offering specifies the-
- Nature of the project or business;
- History of the business;
- The growth potential;
- Motives and the amount of finance needed to realize them;
- Promised collateral or security, and
- A plan for timely repayment of interest and principal.
What else a powerful Business Plan must consist of?
Undoubtedly, the above-described factors are one of the most crucial elements of a business plan. But, apart from that, it must also include the following things that are equally essential for every start-up businesses. They are as follows:
Company registration: You must note that you can’t operate any business without registering it with the government of India. When you register your company, your company gets legal recognition, and you can process your firm without any complications or interference of any governing bodies. Hence, obtaining a company registration should be the first step to commencing business.
GST registration: Although there is a certain threshold value limit for GST registration in India, you can always opt for registering your business under GST to avail several benefits offered under this scheme. Hence, GST registration should be your next step after company registration.
Virtual CFO services: Being a small business or start-up, you have limited capital to operate your business. And hence, you can’t afford a full-time CFO to assist you on the accounting and all the financial activities of the company. Therefore, you can employ a Virtual CFO who will charge only for the services you have asked him/her for.
When do you require a Business Plan?
You can’t just pick any plan for your business randomly. First of all, you are required to assure that the plan that you have chosen will work for your business. And before that, it’s imperative to know when you require truly need the plan. The answer to this is described below-
- At the beginning of the financial year;
- While you are launching a new product;
- When the top or middle management of your company changes, then the new managers must get fresh information about your business and goal;
- For SEED or venture funding;
- Market change ;
- When you approach an angel investor, the first question they will ask you is whether you have a business plan. It will help them make financing decisions;
- When you are in a market where every day the taste and needs of the client keep changing and you have no idea what to do in such cases.
Business Plan Consultation Service
Now that you are aware of why and when you require a business plan, then you can make decisions for the same. Hence, if you are looking for an effective Business Plan for your start-up or an existing business, then contact Swarit Advisors. We have professionals with expertise in legal and financial affairs. They will help you sketch out an accurate business plan. The process we follow is as described:
- Once you raise a query or request a call-back, one of your professionals will contact you very soon.
- Then he/she will understand the need for creating a business plan for your business or company.
- Once both of you have a clearer picture of what purpose is to be served, the professional will lay out a plan based on the mutual understanding.
- He/she will then send the plan to you for review. If any modification is to be made, you can convey, and it will be modified.
- If not, then the plan will be sent to you.
From the above discussion, one can conclude that a Business Plan is nothing but a written description of your business’ future. It’s a document that outlines what you plan to do and how. It can serve as a roadmap for the organization and provides information in a systematic format to founders, financial advisors, and investors.
Reasons you need an effective plan for operating your business are that it provides a more transparent picture of your business, attracts the potential customer, provides you with innovative business insights, etc. Hence, if you’re starting a business, then firstly get an effective business plan.
For the same, you can contact Swarit Advisors. We have a team of professionals with legal expertise in various fields. They will sketch a perfect plan for your business. We ensure that you will be delighted with the results.