A business plan is a document that indicates what one intends doing, how and when. This document outlines in great details, how a particular business activity is to be carried out. It gives a perfect picture of the things needed for the work, the skills to be employed, the time span to be covered, the capital needed for the productions and even how to market the finished product. In fact, it gives the total outlook of a business activity.
A business plan has several purposes. It serves as a guide in controlling the direction of an enterprise. The business plan dictates the activities of a business. It is the boss who makes the decisions as to how to do it, how much to spend, the section of the large market to target etc. It single handedly guides the affairs of a business.
Moreover, it helps in monitoring and evaluating the progress of the business. It plays a supervisory role for any business venture. It meticulously and regularly monitors the progress of a business while evaluating it to see if the set goals and objectives of the business are being achieved. When a business is declining or advancing in terms of productivity or sales it is the business plan that points it out.
In addition, it serves as a collateral or security to seek a loan or financial assistance. It acts as a security when seeking for a loan at a financial institution. It is a guarantee for assistance from corporate bodies and banks.
Several factors must be considered when preparing a business plan. Some of these have been outlined below.
I. Executive summary- This refers to the profile of the members of the executive body of the company. It is not a detailed account of each of them but a summary.
ii. Name and address of business or enterprise- The business plan must contain the full name of the business as well as the residential and postal address of the enterprise.
iii. Identification of a need to satisfy- The enterprise should identify a special need that should be satisfied. This should be explicitly indicated in the business plan.
iv. Establish what you want to achieve or do- The set out goals and objectives of the enterprise should be enshrined in the drawn business plan.
v. Find out or research from past solution to similar problems- Solutions or remedies to past problems encountered by the enterprise should be written in the business plan. The measures taken by the enterprise should be noted in the business plan.
vi. Analyze the industry or market where you can operate e.g. potential customers, competitors, etc.- A good business plan should include analysis of the target group, likely buyers of the product and potential competitors of the same product especially those in the same business location. This would help the enterprise to determine best strategies in winning customers and competing effectively with competitors.
vii. Pick the best solution -The best solution that can proficiently address the situation(s) in vi. above is selected and written down.
viii. Describe the enterprise or business (product, services, background of the entrepreneur) – The full description of the enterprise and its activities should be vividly given. This entails the products and services offered by the enterprise as well as some vital information about the entrepreneur who is manning the enterprise.
ix. Describe production activity e.g. designing and making process, machines, sources of raw materials, location of enterprise etc.- The entire production processes through which the final product or service gets to the customer are fully described. This includes the source of raw materials for the production, the actual production and the machinery or tools that assists in the manufacture of the products and/or services.
x. Marketing activities e.g. customers, pricing, distribution, promotion, advertising, etc.- The marketing and pricing strategies adopted to be used by the enterprise should be stated in the business plan. The various vents for distribution, promotions and forms of advertisement decided by the enterprise must be clearly spelt out in the business plan.
xi. Organization e.g. background of managers and their duties, etc.- The organizational structure or plan of the business thus, the chain of top executives or managers and their assigned duties should be discussed in the business plan.
xii. Financial plan e.g. capital requirement, potential profits, cash flow and sources of funds- A good business plan should have a clear financial plan with details regarding the business capital, expected profits, the day-to-day flow of cash and the sources of funds for the business. This must be explained in simple and straightforward language.
If all these factors are well covered in one’s business plan, it would be very efficient in helping the enterprise to grow and not to incur great losses but rather compounded profits.