Is a pre-requisite to any funding investmentBusiness Planning
The business planning process is designed to answer two questions. First, where are we now? Where do we want to go? The result of this process is a business plan that serves as a guide for management to run the company.
Describing the most critical tasks that must be completed and the time frame for completion, a business plan allows companies to allocate resources to accomplish goals.
The business planning process
Every business needs to have a written business plan. Whether it’s to provide direction or attract investors, a business plan is vital for the success for your organization. But, how do you write a business plan?
There are several steps in planning a business. A business plan captures the vision of the owner, CEO or a board of Directors for both short and the long-term future.
The vision answers the question, “Where your business will be in five years?” It’s not a mission statement but is in alignment with it. The Strategic plan is flexible and “live” that is ready to quickly respond to changes in economy, market and threats. The Business Plan is simple to understand with minimum significant training or systems change.
Once the vision is outlined, the company planning process starts. An end result is visualised and the written plan is made. Business plan document serves many purposes. A business plan seeking venture capital funding is very different from an institutional funding or a plan that is focused solely on internal change to guide company’s growth.
The business’s and team bio
The story of any business is an important step that informs aspects of the company. It is important to include profile, aspirations or career biography of the company and its promoters. This is then incorporated into funding presentations, marketing materials or websites.
In this section, it is important to explain why the company is in business by answering the question, “Why this business?” Entrepreneurs are motivated in part by an interest or passion. The story of the business should reflect that commitment and passion.
The company’s core values and mission statement also play a role in the business biography section. Listing of key experiences of the team, the leaders and key personnel add additional value to this section. Detailed descriptions on how all your people will work together as a team for a common cause – sometimes is a make-or-break for investors.
Outline the business model
The plan document includes a clear explanation of how the business operates on a day-to-day, quarter-on-quarter basis and answers the questions around product or service lines. What the business does, what each team leader does and who these products and services are targeted at and includes profile and data on prospect customers. And lastly this section covers how the business is paid, its price points and payment terms.
The business model canvas — a pre-cursor to the traditional, intricate business plan — helps organizations conduct structured, tangible, and strategic conversations around new or existing ones. MNC’s like Unilever, GE and P&G, use it to manage strategy or create new growth engines, while start-ups use it in their search for the right business model. The canvas’s main objective is to help companies move beyond product-centric thinking and towards business model thinking.
The business model is outlined in one page along with all research and supporting documents for the assumptions made and looks at 9 building blocks of any business, illustrated below.
Following the outline of the business model as above, the following need to be articulated in a business plan.
- Executive summary —a snapshot of your business
- Company description —describes what you do
- Market analysis —research on your industry, market and competitors
- Organization and management —your business and management structure
- Service or product —the products or services you’re offering
- Marketing and sales —how you’ll market your business and your sales strategy
- Funding request —how much money you’ll need for next 3 to 5 years
- Financial projections —supply information like balance sheets
- Appendix — an optional section that includes résumés and permits
A business plan is a written description of business’s future, a document that explains what you plan to do and how you plan to do it. If one writes down a paragraph on the back of an envelope describing business strategy, you’ve written a plan.
Business plans are inherently strategic. You start here, today, with certain resources and abilities. And you want to get to there, a point in the future (usually three to five years out), at which time your business will have a different set of resources and abilities as well as greater profitability and increased assets. Your plan shows how you will get from here to there.