Imagine yourself in a writing class, where you’re writing an essay on a venture you want to set up. You write about the offering, the strategy, the drivers and challenges, and the financials. While turning it in, know that you’ve taken the first step towards preparing business plans.
What is a business plan?
A business plan is a document describing the conception, inception, development, and sustenance of your business. It lays out the information of your plan and your approach, i.e. the strategy, to accomplish it.
Since the business plan positions your vision and mission it serves as a powerful tool to attract resources – men, material, and money – from the providers and consumers in the marketplace. It also acts as your reference to guide and evaluate the efficacy of your business decisions and actions.
What does it contain?
As you progress with your Startup venture, you need to develop a business plan that is on the money. Towards this, it should have three parts encapsulating seven key components.
What are the different types of business plans?
Given the impact, it is important to select a business plan that best suits the purpose. It is akin to preparing for an interview – dress for the job – or running a marathon – wear right shoes – or setting out on a trek – carry the supplies. The business plan should be an accurate representation of you and your business in all its elements. And this is notwithstanding its use for a presentation to investors, or a crowdfunding campaign, or internal strategy sessions. Therefore, choose wisely from one of the following four types of business plans taking into consideration its purpose and objective.
How to maintain a business plan?
Since it sets out the strategy, metrics, and responsibilities, a business plan serves well as a planning and management tool. Towards this, it needs regular reviews and revisions. If you are wondering when do you need to update your business plan, then consider the following circumstances:
- The beginning of a new financial year or quarter, especially in a dynamic marketplace
- Additional financing
- A marked shift in the market’s preferences, consolidation in the demand, and regulatory changes
- New offering or platform development
- Management changes
- Accomplishing milestones in terms of sales mark or employee count or asset/infrastructure
What not to do?
The common misconception about a business plan is limiting its application to seek financing from investors. Besides, there are other myths about a business plan that come in the way of leveraging it for the growth of your startup. Some of these are:
- The quality of the writing and presentation is going to influence the business plan’s ability to land investment: Business plan delivers information the investors need, but it doesn’t sell anything. It is the sufficiency of content – market, product, team, differentiators, technology, and accomplishments – that enables the financing decision. And, not the document per se.
- Investors don’t read business plans: Investors don’t use a business plan for filtering, rather they rely on summary information or pitch. They read a business plan during due diligence process of a start up they are keen on.
- The startup process – Idea > Business Plan > Fundraising > Execution: The process is germinating the conceived idea with a team and guided by a business plan. The germination entails developing a prototype, garnering traction and seeking the market’s validation. The business plan remains an alive document with updates simultaneous with results of the progress. Investors come in much later.
Now that you know what a business plan is and isn’t, you can plan writing a business plan for your Startup and provide your entrepreneurial spirit the direction it needs to soar.