Building a house without a plan is a disaster waiting to happen. In the same vein, you can’t start a business without a plan.
A business plan is basically a written document that describes the goals of the business, methods by which these goals can be achieved, and the time frame for these goals to be attained. In essence, a business plan serves as a roadmap that gives direction to the business.
Now let’s take a look at some of the contents of a business plan
Components of a Business Plan
The content of a business plan is quite vast, comprehensive and encompasses every facet of the business. However, for the purpose of this article, we’ll take a look at these few:
- Executive Summary: Just as the name implies, the executive summary gives an overview of the rest of the business plan. It essentially summarizes the document for readers, giving them a preview of what they should expect to find within the document.
- Mission and Vision statement: There’s a difference between your business’ mission and its vision and both are important tools in your business plan. A mission statement captures the essence of your business goals and philosophies with brevity. Additionally, your mission statement should be aimed at giving out a clear signal of what your business is all about to your employees, customers, suppliers and the world at large. On the other hand, a vision statement vividly captures where you want your business to be at a point in the future hinged on your business goals. The vision statement answers the question; where do you see your business in 2, 4, 5 years’ time? A vision statement is quite relevant as it can inspire and drive stakeholders and affiliates of the business towards achieving set goals.
- SWOT Analysis: The acronym S.W.O.T stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis organizes the greatest strengths, weaknesses, opportunities and threats of your business. The essence of a SWOT analysis is to aid you in developing a solid business strategy while ensuring that you have considered all your business strengths and weakness, as well as the opportunities and threats it is bound to face in the marketplace.
- Financial Plan: Imagine going on a shopping spree, and on getting to the cashier’s desk, you tell him or her that you do not have enough money to pay for the items. The absence of a financial plan can be likened to the aforementioned scenario. Having a financial plan helps you determine how your business will afford to achieve its goals and objectives. The financial plan describes all the resources that are needed for your business objectives. It is important to have a clear picture of your current finances, financial goals and laid-down strategies required to achieve these financial goals; which is why financial planning is an integral component of the business plan.
Why do you need a Business Plan?
Here are a few reasons why your business cannot do without a plan:
- Funding: Money is very important in your business journey as it sustains the fiber of your business existence while aiding you in achieving strategic goals. More often than not, you may not have all the financial wherewithal to get your business up and running. You will definitely need external funding at one point in time. A well-drafted business plan enables your outsourcing phase much easier. Whether you are applying for a business grant, loan from your bank or even pitching your business idea to a friend or family member, your business plan enables potential investors have a better appreciation of what you are setting out to do.
- Attracting the right employees: In the words of Douglas Conant, “To win in the marketplace, you must first win in the workplace”. Attracting key employees is important to the viability of your business. The business plan helps employees understand better what they are getting into, what the goals of the organization are, and how they can be collectively achieved.
- Detect Shortcomings: A business plan more often than not, exposes flaws and shortcomings in your original business idea. Of course, you wouldn’t want to go ahead with a business idea that was flawed from the start without thinking critically and plugging the gaps.
Someone’s sitting in the shade today because someone planted a tree a long time ago” – Warren Buffett
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