Drafting a Business Plan? Here are #5 Rules for Making it Perfect
So you have decided to quit your 9–5 day job, to build up your own e-commerce empire?
But before you become the next e-commerce giant, spend some time to build up your business plan.
People with brilliant ideas find it a chore, as they are unaware of the fact that getting it right could make a real difference to their ecommerce success.
Writing a business plan forces you to consider all aspects of your business and helps you plan it out in more effective manner. For most of the people drafting a business plan, it reminds them of painful memories of past homework assignments. Some store owners view it as something which only businesses in Silicon valley require. But they are not aware that stuff like these will build up a strong foundation for their businesses and help them analyze their businesses better.
In the article below, dive into the key elements of how to create a business plan and analyze your business structure.
Business Plan and Its Importance
- A business plan is the groundwork that you do for your business. A perfect business plan can potentially steer you in initial stages and eventual business transactions. Also one can use the plan as a roadmap for how to construct, operate, and grow business.
- Business plan can help you getting funding or new business partners. Even if you don’t need any funding or submit your plan to anyone, you still got some convincing reasons to write one for your business.
For example, you started a store and even making some sales. Creating a business plan at this stage will help you see bigger picture for your business and prepare strategies for future growth.
Or maybe after 5 years of running a business you feel stuck then creating a business plan at this stage will help you grind your daily activities and discover new ways to market or adding new products to boost your revenue.
- Also if you find your business trending downwards then business plan at this stage will help you change the way your business works and cut down your losses before you get in to deeper troubles.
After considering the points the conclusion is that, you should take some time and write a business plan.
Discussed below are some key points to be mentioned in any business plan, also defining how it helps your business.
1. Executive summary
This is the last thing to write, but will be the first part of any business plan. It summarizes the main highlights and sums up your business at a glance.
In this section you need to be clear, concise and crisp. The main purpose of executive summary is give your readers a high-level view of the company and its highlights before delivering into details.
An executive summary is about a page long and should cover the below key points.
- Overview- What the company is, what you’ll sell, who you’ll sell to and where is your company located.
- Company Profile- Briefly describe your management team, bring on their experiences and skills to the table.
- Products or Services- Briefly explain what you sell and how it is different from your competitors and its advantages.
- Market- Describe briefly where you stand in the market and who will be your potential buyers.
- Financial Considerations- This is about your financial projections, how you will fund your business and what funding you will need.
Investors make judgments based on your executive summary, make it brief and uncomplicated.
2. Company Details
This section includes your company’s description. You get a chance to give a brief summary of what your company does, your mission, business structure, owners details, products or services, type of services and your advantage being in the market.
Other details such as location details, the need that your company is trying to meet and how your product or services actually meet those needs. In short explain in detail the background to your business. Some of the key points to be included are-
- How long you have been thinking about this business?
- How much progress you have made?
- About your ownership and staff level.
- How you stand out of your competitors?
- How will you meet the customers need?
Also one may include external factors influencing your business.
3. Market Analysis
Before launching a product you need to check whether your business idea has a place in market.
The market analysis will ultimately decide how successful your business idea will be.
The question that you have to answer in this section is What’s your target market, and why they will buy your product?
In this section ensure that you have done some in-depth market research to justify your product. Here Market Segmentation is the key- the demographic you are going to target. Things you need to consider are-
- Which is the market segment you are looking to enter? Is it growing at the rate you are expecting it? What is its future?
- What market gap will your product fill in future?
- Explain the demographic and their behaviour. Research all the details and create impactful plans for your advertising.
- Analyzing your market is important but along with this you need have a crucial understanding of your customers. What are the competing products and who sells them?
Consider the following points about your competitors :
- Cons of your competitors product
- Show how your product is better in delivery than those already available.
- Explain your long term process to gain revenue
4. Marketing And Sales Plan
After writing about your market analysis, you need to plan out your complete and in-depth marketing strategy.
You will need to put up the sales plan covering how you will portray your product, how your product will meet the need of customer.
If you already have similar products in the market, then you need to define how your product will meet the need of customers in better ways.
On the marketing side you need to consider the following points-
- How you plan to enter the market?
- How you will grow your business?
- Channels and mediums you will focus for the distribution.
- Online and offline marketing strategies.
On the sales side you need to define your sales strategy considering following points.
- Define structure of sales team
- How many inbound and outbound calls you have to do to make a sale?
- Define average pricing structure.
- What key points you will include about your product to make a sales pitch?
In the final consideration, write what contribution each part of your business will make in your overall profit? Example if you have a store selling home and furniture, but 70% of your revenue will be from beds and mattresses so include this in your plan.
5. Financial Plans
This is the section where you really need to dig in and show the best and worst scenarios.
In this section mention how much your business will make over the next five years.
For an established business, include historical data and make predictions based on that. These numbers will give you motivation to keep you working towards your goals. Companies should realise that financial predictions changes quite a lot of things, schedule a monthly meeting to keep track of the changing factors.
Outline the following details in the financial model
- What will be your income per month
- Your cash flow
- Does your business have enough money to stand in today’s environment?
- At what time you will be cash positive (That you have more money than going out.)
- Give an estimate your resources will cost you
- Include both profit and loss forecast, this gives the investor a clear view of what you want to achieve
Make sure your financial model is 100% accurate with all the justifications as it has the best chance of convincing the investors and source loans to support your business.
Finally close your business plan with an appendix.
You can also include Sales Forecast, Risk Assessment and operations, making your business plan a guidance tool to your whole business.
A successful business plan will give you clear vision of where your business is going, its potential growth and where its limitations lie.
We hope this gives you a better idea of what a business plan is and how it should look like. Turn your ideas into reality.
