Writing A Business Plan What Makes A Good OneWriting A Business Plan Honit kr Piplani
February 28, 2008
Writing a business plan can be a lot of hard work or it can be great
fun. An effective plan can help your company to greatness. A poor one
can lead you out of business. No plan is like asking to fail before you
even start.
Not every business needs a 200 page bound business
plan. However every business needs to have some idea of where they want
to go and how they are going to get there. This article covers some key
insights into writing a business plan that get your business to where
you want to be.
The first stage of any plan is ANALYSIS. You
need to take a very objective look at a number of factors that may
impact your business. There are many factors to consider but the two
major ones are competition and your operating environment.
Let’s
look first at competition. Every business has competition, even if you
think your product or service is unique. How is this? Well it’s quite
simple really, people have choices to make. The most fundamental choice
they make in most cases is whether to buy what you offer or but
something else. For example I could buy a game console or I could buy
groceries instead. Customers only have so much money available so you
first task is to ask yourself what is my competition like and can I
beat them? The more you understand your competition the more you can
develop your business strategy of being different and outperforming
them.
Now let’s look at operating environment. This
understands what factors around your area of operation are likely to
affect your business performance. For some companies this includes
looking around the World in other cases it’s just your local
neighborhood. You need to ask questions such as:
How is the economy going? What is consumer confidence like? Where is technology heading in my industry?
After answering all the questions you need to decide how these might negatively or positively influence your performance.
Now
you know more about your competition and operating environment it’s
time to set some OBJECTIVES. This is what you want to achieve in the
period your business plan covers. It is said that good objectives are
SMART. That is specific, measurable, achievable, realistic and
targeted. Here’s an example of a SMART objective for a hypothetical
business.
“By the end of this year we will have increased sales of product X by 7.5% over the previous year.”
You can see how clear this objective is. It is much easier to achieve high performance with clear objectives.
Now
you need to outline your STRATEGY. How are you going to reach you
objective(s)? This is where your marketing plan often comes in as it
helps describe the programs you will run to achieve your desired
objective(s). To continue the example above our strategy may be to gain
distribution for our product in one new major retail chain.
To
make your strategy work you must then allocate appropriate RESOURCES.
Certain things will need to be provided to reach your goal. This could
be dollars, people, equipment, etc. Your plan must have included the
resources you are allocating and why you believe this is adequate to
get the result.
Every business plans also has some
PROJECTIONS. This is your basic financials that you plan will deliver.
Are you expecting a profit or loss? How much?
Lastly you need
to allow for CONTINGENCIES. Things change all the time and your plan
needs to consider these possibilities in advance. A good way to do this
is to ask What if?
What if a new competitor enters our market? What if a distributor delists our product? What if interest rates rise?
Your
analysis should give you some idea of likely contingencies. It saves a
lot of stress if you have some documented ideas for dealing with them
before they become a big problem.
Writing a business plan is
never perfect, the plan is on paper and you’re operating in the real
world. However a good plan can really guide you in the right direction.
Take time to put real thought into preparing your plan an above all
make sure you USE YOUR PLAN!
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