How to Write an Effective Business Plan in 2021? And their main elements?
A good business plan guides you through each step of starting and managing your business. The business plan is also a road map that provides guidelines so that a business can plan its future and help avoid roadblocks.
A business plan is a document in which a business opportunity or an already running business is identified, described, and analyzed, examining its technical, economic, and financial feasibility.
It is a way of thinking about the key elements of your business. The plan develops all the processes and strategies necessary to turn a business opportunity into a real business project.
It is an indispensable tool for starting a business project independently of the size of the project and/or the amount of business experience of the entrepreneur.
The 3 most important objectives of a business plan are:
1. To create an effective strategy for business development
2. To determine their future financial needs
3. To attract investors and lenders.
The Most Important Elements of a Business Planning Document are:
1. Executive Summary:
An executive summary provides an overview of a large document or research and is usually the first thing your readers will see. The Executive Summary should therefore summarize the key points of the report.
A one-page executive summary includes your mission statement, basics about when and how your company was founded, a description of your products or services, highlights of your development so far, and a summary of what Need to know how you want to grow the business.
The executive summary should re-state the purpose of the report, highlight key points of the report, and describe any results, conclusions, or recommendations from the report. It should include enough information so that the reader can understand the entire report without reading it.
2. Products and Services:
The product and service section of your business plan is much more than the list of things your business offers. Especially if you intend to use your business plan to obtain funding or find partners, the section on your products and services needs to demonstrate the quality, value, and benefits of your business offerings.
The Products and Services section of your business plan outlines your product or service, why your market needs it, and how it will compete with other businesses, selling the same or similar products and services.
Your products and services section should include:
- A description of the products or services you are offering or are planning to offer
- How will your products and services be priced
- Compare the products or services offered by your competitors with respect to you
- The sales literature you plan to use, including information about your marketing materials and the role of your website in your sales efforts
- A paragraph or similar on how your customers’ orders will be processed or fulfilled
- Any of your requirements to create or distribute your products, such as up-to-date computer equipment
- Any intellectual property, such as trademarks, or legal issues you need to address
- Future products or services you plan to offer
3. Market Analysis:
A market analysis is a quantitative and qualitative assessment of a market. It looks at the economic environment in terms of market size, different customer segments and purchasing patterns, competition, and barriers to entry and regulation, both in quantity and value.
The market analysis section of your plan provides evidence that there is a place in the market that your company can take advantage of. This analysis provides the foundation on which your marketing and sales plan will be based.
Here you will assess the competitive landscape in your target market.
- Who are your company’s competitors
- Products and services offered by your competitors
- Strengths and weaknesses of your competitors
- The strategies your competitors are using to achieve their objectives
- Overall market outlook
4. Market Strategy:
A marketing strategy is important for all businesses because it clearly outlines how they will find new customers and ultimately promote their products and services to gain more sales. The marketing strategy includes the company’s value proposition, key brand messages, data on targeted customer demographics, and other high-level elements.
The 4 ps of marketing
It goes without saying that the service or product you are selling should be at the heart of every element of the marketing strategy.
The strategy behind pricing your product should be based on what your customers are prepared to pay, along with costs such as retail mark-up and manufacturing, as well as other considerations.
Successful marketing strategies include all promotional activities in the marketing mix, including advertising, direct marketing, and in-store promotional activities.
Where and how your product is displayed and sold should be directly known to your customers.
5. Financial Planning:
Creating a financial plan can be the most intimidating part of writing your business plan. It is also one of the most important. Businesses that have a full financial plan are more prepared to pitch to investors, receive funding, and achieve long-term success.
A financial plan is simply an overview of your current business financial and growth projections. It helps you, as a business owner, set realistic expectations regarding the success of your business.
Estimates inform your short and long-term financial goals and provide you with a starting point for developing a strategy.
Some Important key components of a strong financial plan
- Define your financial planning goals.
The importance of defining your goals is to provide a goal to orient your plan.
- Broadly estimate cash flow.
Cash flow estimates vary from “what if …?” Let’s analyze
- Assess your risks.
Risks come in many shapes and sizes. Some risks can be addressed through various forms of insurance.
- Define an investment strategy based on the above factors.
Your investment strategy is important. In many ways, it is the embodiment of your financial plan. A good investment strategy reflects the goals you are trying to achieve.
- Review and refine your plan regularly.
Remember that financial planning is a never-ending process. It changes as your life changes.
A business budget is an overview of your business finances. It outlines important information on both the current state of your finances (including income and expenses) and your long-term financial goals.
Because your budget will play an important role in making sound financial decisions for your business, it should be one of the first tasks you will have to tackle.