16 Questions That Every Business Plan Must Answer - Tips From Top Business Plan Writing Companies
Business plan writing companies in India are in high demand due to a surge in a number of start-ups. Business plans are documents that describe the nature of the business, sales and marketing strategy and the financial background, containing a projected financial statement.
For an SME, the benefits of writing a business plan are that it works as a roadmap and provides a direction so that the entrepreneur can plan the future and avoid foreseeable roadblocks. The time that an entrepreneur spends on making a thorough and professional business plan and keeps it up-to-date, is an investment that pays dividends in the long run.
A start-up business plan should conform to generally accepted guidelines regarding the form and content of the plan. Each section should include specific elements and address relevant questions that people who read the plan are most likely to ask. There isn’t one size that fits all formulas to create a professional business plan. However, the following sixteen questions must be answered by every good business plan.
- What is the mission and vision of the organization?
These are also called the North Star statements of the company and they usually guide the founders and employees in the direction they should all march towards. These statements convey the reason for a company’s existence and are inspirational and directional.
- What are the products & services of the company and how will they evolve into a family of products & services?
This highlights the products or services that the company plans to sell to its customers. No company can achieve success on the basis of a single product idea. It is important to have the vision to sell a family of products or services so as to hedge the risk in a business. For e.g., mobile phones are built on a group of ideas like a device for communication, gaming, entertainment, etc.
- What is the competitive landscape and how are other leading players serving the market?
This question delves on how the customers are solving their problem currently. The same problem might be addressed in a completely different manner by two different players in the same market. The answer to this question should also highlight what trends market research indicate for the particular domain.
- In what way will the company be different?
SMEs can address the problem of the customers by solving it in a different way. This could include differentiation in pricing, cost structure, distribution, technology or added value to the product. SMEs need to create a unique position for their products in the minds of their customers so as to become successful in due course.
- How will the company get its first paying customer?
Getting the first paying customer is a big challenge in a start-up’s lifecycle. Successfully answering this question proves the business’ right to exist and shows direction for its future development. Usually, entrepreneurs approach people in their network as their first set of customers and receive the early feedback on their products and services.
- What will be the company’s marketing strategy?
Marketing is where revenues start rolling in a company. In today’s environment, there are multiple channels to market a company’s products and identifying the three most lucrative channels is the key to any business’ success. The marketing business plan should always be supplemented with necessary numbers on sales that can help the entrepreneur to make the right decisions.
- What organization structure will the company require?
This highlights the critical skills that the founder needs to possess and others which will need to be supplemented from external sources. It also describes the hierarchy of the organization, roles, and responsibilities of different individuals so as to address challenges in respective areas of operations. For an SME, the flatter the organization structure in the initial stage, the better it is for the growth of the company.
- What capital expenditure will be needed and why?
Capital expenditure provides benefit to a company over a long period of time. For an SME, it is important to determine the adequacy and the cost of such expense since the money gets blocked in the expenditure and is unavailable for usage anywhere else. Also, if an SME is focusing on getting a high valuation then it is always recommended to make the least amount of capital expenditure.
- What revenue expenditure will be needed for the same period?
Revenue expenditure is that sum of money that an SME has to expend immediately to meet the ongoing operational costs of running a business. In other words, it is the sum of money to be spent to make revenues for a company. This will help the entrepreneur understand the amount of capital required to operate the business.
- How is the cost structure different from the competitors?
One of the fundamental reasons of creating a start-up business plan is to identify the amount of cost that a company will require to start its operations. Having an educated idea about the start-up cost can benefit an SME to face unforeseen circumstances. The cost structure is also used to determine prices and highlight areas where prices can be reduced.
- What is the company’s three years cash flow and when will it reach a break-even?
Poor cash flow management is one the main reason why start-ups fail and thus it becomes one of the most important financial statements for an entrepreneur to track. This statement shows the ability of a company to produce cash and the usage of that cash. At the same time, it is important to define the breakeven point to justify the investment in the business and calculate the returns on the investments time wise.
- What are the company’s R&D plans? How will the activity be sustained over a period of time?
All stakeholders don’t want a company to be a one-time product hit. They expect regular upgrades and changes in the products and keep adding new features or value propositions. This has led to pressure on SMEs to have dedicated R&D departments and continuously keep innovating their products and services.
- What is the funding plan for the company?
Funding plan highlights the sources of investment in a company: How much of it will come from personal capital from the founders and how much from other external sources? This also describes the total funds required by the SME and how the funds will be used by the company and the cost to use external funds.
- What is the plan for recruitment, training and retention of the employees?
One of the biggest challenges that SMEs face is finding good human resources and retaining them. This answer should highlight how many employees to have, when the company plans to recruit, the training requirements and strategies to retain them like issuing ESOPs in the company.
- What are the manufacturing and distribution plans?
There are various models for manufacturing and distribution of products. This could include outsourcing the manufacturing process, distribution through partners or network marketing, etc. All these will have cost implications on the company’s financial plan and cost structure.
- What are the various risks involved in the organization and in what way will the team de-risk them?
A business will involve in various kind of risks: financial, operational and exit risks. It is important for the entrepreneur to identify such risks and think of probable solutions to de-risk them. This should include lowering dependency on any one particular product, geography or customer.
While writing a professional business plan it is important to be clear and focused on what does the entrepreneur want to achieve. This will help to align the team towards the same goals especially if the company is outsourcing the task to professional business plan writers. At the same time, it is better to choose a template that is easy to use. In some cases, SMEs start using business canvas rather than creating rigid business plan documents.
Whenever an SME decides to create a professional business plan they should keep it short, simple and easy to understand along with realistic goals and what is relevant in the economy in the given industry. It is also important to ask an advisor or business plan consultants to review the business plan and receive feedback and suggestions for improvements.
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