How to Write a Simple and Effective Business Plan in 7 Steps and Pitfalls to Avoid by Having a Business Plan?
A business plan is guidance, an important assistant for anyone who starts or runs a business. Business plans may consume some time to make, but in the long term, you may save much time and cash flow.
You may need a business plan to apply for bank loans or to get financial support from investors.
Here are some tips on writing a simple and effective business plan.
Step 1 - Create a vision
Before you get lost in details, start out with a vision or a mission statement. A mission statement should include values and a future view of your business.
Step 2 - Make an executive summary
An executive summary summarises the whole business plan. An executive summary is necessary, as it is important to gain the interest of the viewers to continue looking at your whole business plan.
Step 3 - Include a description of your targeted market and services
This is essential to allow viewers to get a clear picture of what you are trying to sell or service. State it clearly in your business plan.
Step 4 - Include an analysis of the business environment and background
Do not expect viewers to understand what you are dealing with, even if your business is not a new idea. You may also review it anytime in the future for further adjustments.
Step 5 - Include a marketing and operation plan
Say it in the report how you will run your business. Include every detail of it. Be clear and make sure your reports are easy to view.
Step 6 - Analyse your business competition
Find out all the detailed information you can get from direct or indirect competitors. Read about them from business magazines, newspapers, or get resources from trading associations. Understanding competition is crucial to making a perfect business plan.
Step 7 - Finance planning
There is no business without involving finance. Be sure of your business financial status, and make clear reports about it. Justify your figures because a slight mistake may ruin your business plan, or your reputation in front of the viewers.
Exploring Financial Needs - Finance is important to set-up a new business or to upgrade business standards. One way to explore financial needs for business is through financial planning in a business plan. Financial planning helps managing expenses, controls spending and maximises savings for an optimum budget in a business.
Difficulties You Can Run Into Without The Proper Business Plan - A business plan is important to keep you on track with your initial goals for the business.
Here are some pitfalls by not having a business plan:
1. You do not have a clear path.
Without a proper business plan, you may run your business as it goes, but you may soon find out you have run off track. You will forget your initial business goals and then do something new or have very different goals.
2. You may miss an opportunity.
Investors or banks for business financial support or loans mostly require a business plan. If you do not have a proper business plan, you will not gain the viewer's interest to invest or provide loans for your business.
3. You may fail to prevent a failure.
With less information, you may neglect a part of which contributes to the great success of your business. When failure is approaching, reviewing an improper business plan will not help you to cope well with it, as you are not able to adjust to the situation as soon as possible.
4. You do not have an ability to foresee the future.
Practically, business plans help you to start up a business with predicting the future and benefits your business may bring. If you do not have a proper business plan, you would probably not have a habit to think of the business in the long-term rather than just seeing it in the short-term.
5. Your business will experience slow growth.
People think having a business plan may restrict them from thinking out-of-the-box or having freedom to do as they like. However, without a business plan, how would you know your potential of bringing greater success to your business?
To summarise, a business plan includes an executive summary, a mission statement, business description, environment analysis and background, financial plan, competition and market analysis, operation plan and any other attachments. Without a proper business plan, you could find your business struggling or even failing.
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Research and Source Acknowledgement
https://www.business.gov.au/ (Australian Government website)
Copyright 2020 Dynamic Zenergy.
This article is not intended for use as a source of legal, business, accounting or financial advice. All readers are advised to seek services of competent professionals in legal, business, accounting and finance fields. This article is general information only.