Business plan- importance and structure

MEANING/ IMPORTANCE

A business plan is a written document that helps; entrepreneur, employees, partners, managers, vendors, management, lenders (banks), suppliers etc gain a better insight into the direction that a business is going or will go. Any kind of business needs a plan – no matter how small or big the business might be. A business idea without a plan is just like a mere wish that dies off with just a matter of time.

Before you enthusiastically hit the street in search of ‘factors’ to help your new inspiration become a reality, first think of having a plan of action.

My primary aim of writing this article is to let you tap into my wealth of experience of writing business plan both as a consultant as a business owner. Hence, find the step-by-step approach/structure to develop your own business plan.

OUTLINE OF CONTENT

Though this article is not meant to tell you the content of your business plan, but before I go on discussing the structure of business plan, here are the five basic ingredients of a complete business plan

• A cover letter
• Executive summary
• Non-disclosure statement
• Title page
• Body (including conclusion)

It takes discretion to get it right to the prevailing circumstance. Care should be taken to draft the non-disclosure statement or agreement – that the ideas and content of the business plan should not be put to use by the recipient in his/her favour including its/their agents. I was a victim of this when I started out in consulting newly – so be warned!

STRUCTURE

A good business plan must have the following seven components:

1. Mission Statement (Statement of purpose). A mission statement is a clearly stated objectives and goals of a company. this will reflect the driving force behind the company’s existence or why you want to establish it. It will clearly state out the needs that the company is out to satisfy. For example, my company is established with the aim of rendering consultancy service at an affordable price- that is by the way.
2. Market background/Research. A concise, yet informative research about the market for the products and service of the company. This is ‘a must’ step to be taken in any meaningful business plan. E.g. “the market for new consulting firm in Lagos is high because there is a lot of start-up businesses springing up – and is to continue in the future. Please avoid the temptation of including irrelevant materials in this section of your business plan. Only include factual matters. You can talk about the population, the peoples’ spending habits or pattern of spending, etc.
3. Description of products or service. Feel free at this point to do a little marketing here. Remember to place more emphasis on the benefit(s) of your products or services. Many people get it all wrong here by focusing on features rather than benefits – place do avoid that trap.
4. Current or acquirable man-power. A lot of start-ups here in Lagos, Nigeria, especially the sole-proprietors tend to ignore the importance of this in their business plan. That is a wrong way of doing it. You need to sell the expertise of the most valuable assets of your business- people-. Whether one or many people. Explain what the business stand to gain from the expertise of the staff (both current and potential).
5. Implementation of strategy. Strategies are those plan of action that a company intend to execute to enable it achieve its objectives. On their own, they are worthless irrespective of how fantastic and feasible it may be. Without executing or implementing your strategy, you definitely cannot move forward in business. If this implementation of strategy is that important, don’t you then think you or the recipient of your business plan will need clarification on it? Put in ‘black and white’ how you intend to move from point A to point b. bear in mind that implementation of your business plan is suppose to be a process and not an end in its own.
6. Risk Element. No venture is risk free. Risk here will include uncertainty (while risk is based on past data, uncertainty is more or less a guess work). For your business plan to have ‘byte’, it must include every perceived risk element and how it intends to tackle them. A lot of entrepreneurs have hurt themselves (in court cases) by not stating a broad spectrum of risk factors in their business plan. Try and think outside the box in this regard. It will do you a lot of good in the long run.
7.  Financial Matters. The life blood of every business lies in financials. If you are already in business and running, put all your financial information in paper or electronic format. And if it is a new business, make reasonable forecast. Spreadsheet program are usually employed to achieve this. If you are not a financial person, get someone to do it for you. (Get an Accountant or a financial planner who specializes in financial modeling). Care should be taken to mesh the financial section of the business plan with the implementation section. This is to enable one make a reasonable arrangement for finance in case of anticipated shortage.

The skill to develop a business plan is a must for any entrepreneur or anyone who aspires to be an entrepreneur. I do hope you enjoyed this, but if your question is not answered, kindly post it on the comment space below or if you feel you want to contribute to what is written in this article, contact me.