Elements of a Business Plan and Why You Need One

Entrepreneurs often start their businesses without planning. The lack of a business plan can hinder you from identifying different essential aspects of your business venture, such as competitor’s analysis and marketing strategies.

Even if you have been running your business for years, having a business plan is still crucial. Remember that planning is an essential factor in helping you succeed in your business, which we will talk more about in the following sections.

What is the Purpose of a Business Plan?

Your business plan is a tool that allows you to navigate your business towards your business goals. Some may consider it as a roadmap for identifying business goals along with how to achieve these goals. Here are some of the purposes of your business plan:

• Set Goals and Priorities.  A written business plan allows you to put in paper and in practice the business priorities of your business. It provides a guide for your long-term and short-term goals and helps you define your strategies for these goals. Aside from this, your business plan must also contain steps on how to handle and mitigate possible bumps along the way.
• Gives Control.  A well-developed business plan also allows you to look from the outside. This means you get to see your business in an objective mindset and see your weaknesses and where you can improve.
• It’s an Opportunity.  A business plan or the process of making one creates an opportunity for you and your business partner or employees. The method allows you and your team to identify different factors in the business that can affect its success.

Elements of a Good Business Plan

It’s easy to access a blank business plan online and then use it for your own. However, the expert business consulting in California suggests to always work with someone who knows the elements of a business plan that you should consider when working with a business consultant:

• Company Details. You should have a summary of your business which includes a brief introduction and history, mission statement, and company objectives.
• Key Products and Services. Identify your essential products or services and include in each item the features, benefits, development stage, and the rights of the products.
• Industry Analysis. You should also include in your discussion with your business consultant in the current industry where you operate and your market size. In this aspect, you will also be able to identify the opportunity, analyze your competitors, and create even the possible growth of your market.
• Marketing Plan. This is where you specify your marketing objectives and strategies in order to find or retain customers for the products and services you offer. It includes your pricing strategies, product or service positioning, sales strategy, and similar marketing practices.
• Operations and Development Plan. In this aspect, you will have to identify your operating and development strategies, the scope of your operations, and the current operations you are undertaking.
• Financial Plan.  This is one of the most critical part of your business plan. Your financial plan is where you forecast and strategize for your long-term financial goals. The plan allows you to align the financial capacity of your business with your goals and objectives. It also provides an insight on how where and how you will have the financial capacity to run your business. Include the following in your financial plan:
  • Balance Sheet – a snapshot of the assets and liabilities of the business.
  • Income Statement – this is the summary of the income and expenses of the business.
  • Cash Flow Statement – this statement contains the forecasted flow of cash of the business within the year.
• Management and Personnel. The business plan must include your recruitment process. It must thoroughly discuss your staffing, training, and the cost and timescales of the process. The business plan should also explicitly include the members and designation of the management team and the staff.

These are just some of the steps on how to prepare a business plan. A business consultant will help you create a business plan that is suitable for your business. However, to start with, you should first gather all the information you have on your business.

• As an entrepreneur, you should also consider the following with your business consultant:
• Your business plans must be realistic. It should not be an over-optimistic forecast of sales as this can affect your budget, and it can even result in a crisis in your cash flow. Business consultants always suggest to always be realistic in this cases as there might be threats that you may overlook in being overly-optimistic.
• Write your business plan for a third party even though the plan is for internal use only, as of the moment. This will allow you to include more thorough details and statistics about the current status of the company.
• When preparing a budget what should you focus on creating a budget that can be used for the entire year. Your budget must be updated monthly with your finance team in order to ensure that you have reached your business performances within the set expenses.
• Always look at your sales forecast as you have to change your budget as your sales changes. Remember that an increase in the budget should also mean that your sales forecast for the month or quarter is set to increases, too, in order to cover staffing or additional inventory needs.

These are vital elements when creating a business plan for your current or new business venture. As an entrepreneur, it is always important to work closely with expert business consultants who can guide you through the process in order to prepare for possible untoward business scenarios.

Remember that the changes in the paper will take time to transpire in reality. Therefore, a business plan allows you to identify and prepare for your business which is better. Make sure that your business plans continually changes and that it is dynamic as the market or industry change.