A business plan is a document that describes your business goals and provides a roadmap.
A business plan helps you to adhere to preset targets and prevent deviating from the selected route. The fact that you have thought about your business in detail and written a business plan will help you to understand your business better, detect possible faults and identify ideas that will end up in competitive benefits.
Do I Need a Business Plan?
If your kid decides to sell lemonade, and if all details are thoroughly thought through and written down, it will help to optimize expenses and get more profit. For example, your kid can compare prices for disposable glasses, lemons, and sugar, determine the best place and time for the business, and so on. It means creating a business plan.
It doesn’t matter how many pages you are going to write. Just forget about any ambitions and try to write down every action you are going to take. It will help you to understand your readiness level. Also, you might start asking some questions that wouldn’t have arisen otherwise. Some people look for replies while practicing, and others use training sessions to find the right replies – but the most important thing is to find them and write them down in a document.
A business plan is a document that describes your goals and strategies to achieve these goals. It will help you to formulate the goals and will keep you on the right track to make your business move in the predetermined direction and with the predetermined means.
I launched Tetta Studio in 2003 when I was a first-year student. I worked with businesses and observed constantly that many entrepreneurs work intuitively and memorize all information about the business.
When they need to explain to me how everything shall operate, what website they need, and what they are going to advertise, they cannot explain anything of that. It causes frequent problems and absurd, absolutely unnecessary expenses that pull the business to the bottom.
I recommend starting with the AS-IS model to move on with the creation of a business plan and improve the situation.
AS-IS Model
If you are a newbie in the business, I recommend you start the creation of your business plan by describing business processes as they are. Those are the general positions on business operation and interaction with the client. This approach is called the AS-IS model in the business.
During the development of this model, you will have to determine the key positions for the business processes and provide a solid base for your decisions. If you find it hard to imagine every step, you can recreate the customer experience and clarify some key positions and requirements personally. By taking this step-by-step approach, you can learn more about your business, your clients, and the market conditions. In some cases, it is helpful to not only build a detailed model of business processes but to detect the drawbacks that your competitors have and turn them into your advantages.
Scheme 1. A classic AS-IS model works like this – it illustrates clearly how customers collaborate with the employees working in different departments. An example of a simple taxi service scheme and visualization of order acceptance and processing.
Risks Connected with the Absence of a Business Plan
Your business plan is the set of your calculations and protocols. Calculations demonstrate your company’s direction and potential, while protocols describe situations and reactions to them. If you don’t have calculations, you will not only face difficulties with your business development but also with working in a competitive environment.
Calculations help to optimize expenses and create discounts and affiliate offers. Whatever you think, any business and money love mathematics; therefore, if you create a formula that will serve as a foundation for your work, you will be able to work and develop your business. But if you are going to copy what your competitors do, you will face higher expenses and will fail.
A Business Plan Determines Check-Points for Your Development
You can indicate your goals in your business plan and sum up the results when the year is over. In your business plan, you set goals and compare them with the achieved results. When you store your yearly reports, you can see whether you tend to complete your plans.
For example, your goal might be to lower the price of the product. It means that you will be looking for new suppliers and more comfortable conditions during the year. As a result, when you compare your reports for 3-4 years, you will be able to see the price lower and profit growth. It means that the goals set by you are achieved, and you tend to influence your business instead of relying on pure luck.
How a Business Plan Helps to Scale
When you have a clear business plan and good indicators, you can count on attracting investors and partners. Small businesses are frequently afraid to tell about their ideas and try to do everything on their own. But this approach is very difficult and normally is the cause of problems, a crisis in the family, and significant debts.
You shall clearly understand one thing: people who have many are there in any country, and these people are ready to invest in the most ambitious projects. The main thing is not to be afraid to take responsibility for your project and have reliable ways to manage it, to have good indicators for all the crucial positions, those that I have mentioned previously. If your project is a typical local business, your chances to succeed are high, and the main thing in such a case is not to lose the opportunity. You’d need to communicate and tell about your business to get an investment. And a well-prepared business plan will help you to get ready and to substantiate your ideas during the conversation with your potential partner.
A Good Business Plan: Three Crucial Points to Consider
You have probably noticed that big companies have their fan clubs. Many students are ready to work for free just to become a part of a big team and to wear a branded T-shirt with the company’s logo. Here, psychology and the desire of people to follow a strong leader play a significant role. A strong business is like a strong leader – it attracts people.
People are always looking for stability. They need a strong and a successful leader who knows where he is heading. The confidence of a strong business is based on a business plan and is a brand’s character. The character forms the brand and attracts potential employees and customers.
1. Consider the interests of your employees
To make employees interested in working for you, your business plan shall consider their interests. First of all, those are the opportunities for development and different motivation mechanisms. Those can be different bonus programs to make payouts or technical innovations with gamification details that facilitate working processes by utilizing programs.
For example, CRM systems that automate a significant part of routine tasks facilitate daily tasks for employees, and the introduction of bonus ratings motivates employees to work efficiently.
2. Forecast problems
When you are writing a business plan, you study the market and learn what is needed to get a clear idea about your clients and market behavior. A strong business plan forecasts probable problems and offers protocols to solve them.
3. Consider new experiences
A business plan is not only instructions and calculations. It is a living document; it can undergo transformations by gaining new experiences and when the market conditions are changing. The goals may be valid for decades, but priorities and strategies to achieve the goals will be changing constantly. When the company grows and gets new experiences, you shall review your business plan and edit it.
How to Write a Good Business Plan
A good business plan is an updated business plan that displays the business condition at a specific time. Try to be realistic when writing a business plan and set realistic goals. It is better to create a maximum plan and a minimum plan. Consider legal aspects along with your experience and the experience of your employees. A lawyer and an accountant can help you to do so. Everything starts with an analysis and study. They are performed to reply to three important questions:
- Who is my client, what does he want, and how much is he willing to pay?
- Who are my competitors, and what are their benefits and drawbacks?
- What are the main problems in the market, and how can they be resolved?
The Business Plan Structure
I worked with different business plans, and I have made my check-list of the most important sections:
- A resume – a short description of your business.
- The company profile – an extended description of your business.
- Your market – the description of the market where you are planning to operate.
- Your offer – the description of your services or your product.
- Your business model – a short and clear description of how you are planning to gain profit.
- Marketing – describing your strategy and how you will sell your offer.
- Goals – your plans and needs in financing for the next 3-4 years.
- Financing – think and note the main and secondary financing sources for current expenses, salaries, etc.
- Crises – the description of possible complications that you might face and how you can solve them efficiently and rapidly.
- Development – think about what you would do if you get additional investment. How can it impact your product, and how can it help you to scale your business and achieve your goals faster?