Business Plan- Who Needs It? Top 5 Business Segments Where Business Plans Widely Used

A business plan is simply a document outlining business objectives and how these objectives are going to be met by way of tactical plans. Included in a business plan are business strategies, aims and objectives, people, pricing strategy, marketing and communications plans as well as key financial indicators.

Where Is Business Plan Widely Used?

A business plan is like a map and a compass for a business. Without it, you’re traveling blind. With a plan, you set objectives, establish priorities, and provide for cash flow.

Business Plan is widely used in…

1.You are applying for a business loan.

Majority of the banks require it, and even those that don’t strictly require it expect it. They expect it to be a summary of the business, with some predictable key points.

2. It is used when you are looking for business investments

Investors require a business plan. They invest in the people, the idea, the track records, the market, the technology, and other factors; but they look to the business plan to define and explain the business.

3. It is used for Alliances

An entrepreneurial firm may need to form alliances with other firms to reach new markets, develop new products, or create common facilities. Other firms may want to know more about the business before committing to any long-term arrangement. Sometimes, a business plan can help convince a well-established retailer or distributor to commit to the start-up.

4. It is used if an entrepreneurs plans to sell a business, or set a value on a business

Entrepreneurs don’t realize that plans are not just for start-ups, loans, or investment. They don’t realize that business plans are easier to develop than most people think. To succeed in business you simply must plan the steps, set priorities, allocate resources, and manage the cash. Sure, some people say they don’t plan, but if they’re successful then they’re actually always planning in their heads. And you can keep that plan in your head if your business is very simple, cash flow is always adequate, you don’t work with other people, and you don’t need to communicate your business plan with other people either.

5.  It is used to grow your existing business 

Use your business plan to help decide what’s going to happen in the long term, which should be an important input to the classic make vs. buy.  The planning process helps you learn about the different forces and factors that may affect your success. If you’re already in business, it helps you to step back and look at what’s working and what you can improve on. Instead of worrying about the future, a business plan helps to give you a sense of control over your business and your livelihood.

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Suggested Structure For Business Plans

The following structure will be accepted by most of the banks, but is at least the minimum required:

• Title page and confidential clauses
• Executive Summary (objectives, products and services, target markets, financial projections, investment required)
• Products and Services (Products summary, pricing, margins, profit per unit)
• External Analysis (economic indicators, market research and trends)
• Internal Analysis
• SWOT Analysis (strengths, weaknesses, opportunities, threats)
• Marketing Plan
• Sales Plan
• HR Plan (including CVs and bios of key staff)
• Profit and Loss Account forecasts
• Cash Flow Forecasts
• Balance Sheet Forecast
• Appendices for more detail

Business Plan Can Help In….

• Setting out an accurate plan will help you determine whether your business idea is feasible. By making cash flow, sales and other financial forecasts and looking at what sort of target market you will have, you can work out whether your idea will work as a business and how easily you will be able to monetize it.
• Because it sets out exactly what your strategies are and how you are planning to run your business, a well-written business plan containing relevant figures will help you convince investors your business is a reliable proposition.
• A well-researched business plan includes the right figures and realistic forecasts will also reassure potential investors you are a sensible investment opportunity.
• Even if you’re not planning to raise money, a business plan will allow you to map the future of your business. By putting your thoughts down on paper, it will allow you to come up with a comprehensive strategy on how you will deal with various scenarios.
• Your business plan gives you a place to list specific goals and objectives for your business, helping you to set out clearly how you plan to meet these goals and on what sort of timescale, and forcing you to commit to that course of action.
• Because you include detailed financial and market forecasts in your business plan, it will help you manage cash flow by showing in detail exactly what you expect your incomings and outgoings to be within given periods of time.

Bottom Line

A business plan is not a document you create once and store in your bottom drawer. It’s a living guide that you should develop as your business grows and changes. Successful businesses review and update their business plan when circumstances change.

Set yourself a reminder to review your business plan regularly.

If you have a team in your business, holding brainstorming sessions is a good way to benefit from their knowledge – it ensures you’re all on the same page and that you get their support.

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