Why do you really need a business plan


A business plan is a key step in starting your own business, but for many start-ups, it’s also a step that is skipped in the excitement of starting the business. Here’s how to dispose of one.

Making the decision to start your own business takes courage, vision, ambition…and planning.

A business plan is a key step to take in your entrepreneurial journey. Not only does this force you to think about all the different aspects of your business – from who your customer is, to the size of your market and how you will advertise your product or service to how much money you you need to be operational, what skills are you lacking and who are your main competitors – it is also a document that will be useful to you later. For example, you will use it (probably a revised version) when applying for funding or planning your first marketing campaign.

But for many start-ups, the excitement of starting the business distracts from the need to plan. Set aside time to develop your business plan and treat it as a work in progress, something you will continue to update as you discover new information about your customers, the industry you are entering or your financial obligations.

Google “business plan” and you’ll quickly find thousands of variations, because the truth is there is no set format, length, or template. You should compile a plan that works for you, but there are some details you should aim to include.

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The basics of the business plan

Summary: This section is an overview of everything that comes in the business plan. This is the most important part because it will convince an investor, financier, partner or whatever to read on.

What to include:

  • A brief explanation of your product or service
  • Brief introduction to company executives
  • Overview of employees
  • Your unique selling point – why will you succeed?
  • The current state of your business (including financial situation)

Company Description: Now you can start going into the details. In this section, you will talk about the business you intend to start.

What to include:

  • Legal person (e.g. sole proprietorship, private company, etc.)
  • The problem you are solving
  • Your competitive advantage
  • Expertise, experience and skills available to your company
  • Recruitment – ​​will you need to hire employees, when will you be able to recruit new people, how will you do this, who is your ideal employee?

Market analysis: This is where you expand on the opportunity you have identified for your product or service and the viability of building a business from that opportunity.

What to include:

  • The gap you plan to fill
  • The size of your target market
  • Your ideal customer profile – who are they, what are their buying habits, can they afford what you sell, how badly do they need your product or service?
  • Industry trends – is the market growing, changing or being disrupted?
  • Your competitors – who else is after your customer? They might not even be selling the same product as you (for example, a travel agency is not just competition for other travel agencies, what about online booking services or suppliers themselves?)

Product/service: Find out every possible detail about what you are selling.

What to include:

  • Details about what you sell or do, including suppliers, availability, quality, materials, shelf life, etc.
  • Product life cycle or service process – i.e. how long will it take you to get your product into the hands of your customer or to provide your service once it is requested
  • The price of your product or service – is it a fair price for what you offer? Is it a price your customer will pay? And, will it bring in enough revenue to cover your costs and leave you with the kind of profit you are hoping for?

Marketing and sales strategy: It is an important part of your plan. In fact, you may want to create a separate marketing and sales plan for your business and include only the key points in the overall business plan.

What to include:

  • How you intend to promote your product/service to your customers – this includes the channels you will use, your branding, the most effective way to reach your target market, the length of certain campaigns, what you will say about your product, etc.
  • Marketing budget – the amount of money you’ll need to promote it (or, more importantly, how much can you afford to spend?)
  • Sales mechanism – how will you sell the product and how will customers pay you? Are you setting up an online business? Do you need card facilities? Do you have a professional invoicing system? How will you handle refunds or returns?

Financial projections: It’s time to take stock of the facts and put hard numbers based on the information available to you rather than guessing or hoping.

What to include:

  • Business model – how will your business generate revenue? Are you dependent on large sales volumes? Or do you plan to establish long-term contracts with loyal customers?
  • Costs and expenses related to running your business and sourcing or creating your product.
  • Capital needed to get started and how you will raise those funds.
  • Breakeven point – how long will it take you to start making a profit?

Thinking about each of these points is not enough. Write down your plans so you can refer to them as you progress through your business, and remember to update them as things change. A business plan is also extremely useful when you are ready to scale your business.



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