An Entrepreneur’s Guide to Writing a Compelling Business Plan
As a management consulting company in Nepal, we receive a lot of queries regarding business plans. Most of these queries are initiated by entrepreneurs who are applying for a bank loan or are trying to present their business to potential partners. We are publishing this blog to guide entrepreneurs who do not require the extensive level of research and effort that we normally provide as part of our service. We hope this helps you document and present your business to your potential financial and other partners.
A Business Plan
A Business Plan describes what a business does and what it plans to accomplish in the near future. It communicates the company’s vision, provides an overview of the company’s marketing plan, operations, competitive landscape, as well as contains the company’s financial projection and analysis.
Most new business ventures use a business plan as a guiding road-map to move an enterprise forward consistently and purposefully. Yet, for many different stakeholders of a business, a business plan may serve many different purposes.
For instance, founders or entrepreneurs may primarily devise a Business plan to make a logical and objective blueprint of their business and its operations. After all, running a business requires considerable time and effort, and writing a realistic business plan allow founders to build the necessary groundwork to run a viable enterprise.
On the other hand, a business plan also serves to provide useful insight into business scope and strategies. Most often than not, potential partners, suppliers, and investors will refer to the company’s business plan to evaluate their decisions on whether or not to get on board with the company.
For example, in the Nepali Business context, for banks, a business plan is a pre-requisite to extend a business loan. Business ventures also follow a working structure when requesting a loan from financing institutions.
Saying this, as per the company’s requirement and need, a business plan may vary in length, but in principle, it will describe key details of business through combinations of the following six elements.
Business Overview
Business Overview gives key insights into a) Business Concept and b) Business’s Product line. The purpose of this section is to translate a business idea into a working concept. It should explain why the idea came into being and what the business intends to achieve and how.
For example, the founder may have noticed a trend in the market which may have prompted them to realize unrealized potential or need of the market.
The business concept should therefore briefly define the business’ product or service, its target segment, the delivery channel it will follow, and unique selling proposition to fulfill the identified gap in the market.
The business product line should define the product and to whom the product is being provided. Based on the product’s features, purpose and uniqueness the product can be classified into different categories or “product lines�?.
Market Analysis
The market analysis section is composed of three essential elements: Market Overview, Competitive Landscape, and Target Market.
The market overview section describes the industry that the business will enter. Based on the evidence, the reader should be able to determine types of players, the nature of the competition, barriers to entry, and space to gain a competitive advantage.
The competitive landscape delves deeper into the pit of the competition. It conducts detailed comparisons between the business venture’s products with its competitors in the industry. The comparisons are generally made in terms of price, packaging, product range, product quantity, marketing tactics, and existing strategic relationship with suppliers or retailers.
Most new business ventures do not have the means or resources to cater to an entire industry. Target Market slices the industry into a different segments based on say demography or location, and zooms into a particular segment or target market that the business will try to specifically appeal to. The business may also divide the target market into primary and secondary markets and devise strategies to most tactfully grab their attention.
To write an effective market analysis, founders must know industry trends and consumer behavior.
Marketing Strategy
The Marketing Strategy focuses on how a business will market and sell its products or services. The overall marketing strategy comprises of 4P’s: Product, Price, Promotion, and Place.
Defining 4P’s assists businesses to describe the positioning of their products. Meaning aspects of the promotion mix, pricing, and distribution strategy articulates how the business wants consumers to perceive its products.
When writing this section of a business plan, all four Ps must be consistent with each other, any inconsistencies can lead to dissonance in consumer’s perception of the brand. For example, if a business wants to sell an expensive international cuisine, the location and pricing strategies should also signal exclusivity.
Operations Plan
An Operations plan should provide a picture of how the entrepreneurs plan on running the company and how the product will be produced. While writing this section it is vital to strike a balance between providing adequate information and revealing too many details. To keep the information crisp, the section can be supported with diagrams of the production process or service blueprints.
Apart from this, the operation plan can briefly touch upon: which raw materials will be used and how they will be sourced, where it plans to establish its production or retail facilities, and identified Human Resource capability that it will need to run a business in full-scale.
Identifying administrative expenses and projecting target revenue is another crucial element that must be present in an operations plan. It should provide detailed insights into the total fixed cost, overheadexpenses, and the revenue it will need to earn to break-even. Similarly, all contingencies and risk factors must be accounted for before estimating the potential of business to generate profitability.
Investment Plan
Closely based on operations plans, the Investment plan quotes the amount that will need to set-up a business at different stages. The Quoted amount must be inclusive of the cost that is incurred in setting up a business facility and to sustain its operations for a certain period. The particulars under which investment will be made must be categorized and represented scientifically. The section should also highlight how the business intends to finance its investment.
Financial Projection and Analysis
Lastly, the plans that are developed so far in the above sections are translated and developed into quantitative and financial terms. The final section of a business plan comprises financial projection and analysis. It consists of the projected balance sheet, projected income statement, and projected cash flow statements. The assessment of whether the business is feasible or not as well as identification of the breakeven point and safety margins is covered in this section.
Writing a proper business plan is the first step to building a successful business. As a part of our Advisory Service, Biruwa Advisors holds a demonstrated expertise in writing a comprehensive business plan for its clients. As per the client’s requirements, we analyze the Business’s core products/activities, marketing, industrial environment, and financial feasibility to devise an appropriate business plan to meet our client’s needs.