What is it?
A simple business plan will describe the internal and external environment of a company. Its aim is to inform internal and external stakeholders, individuals or groups of individuals internal or external to the company. Usually it will include information about the strategic position of the business, plans for the future, the management, products and services offered and the financial position of the business. In a few words it will give a detailed description of the business.
A simple business plan structure: Executive summary: A short description of the whole business plan. Many stakeholders may read this part only, because of the lack of time or because they may not require a deep understanding of the business. For example consumers will not care about the financials of the business but will only care about the products and services. Thus, its best to use rich information based on the stakeholder the report will be given to. Business description: An overall description of the business’s history, the basic market sectors the business is part of, and what the business main products or services are. Competitor analysis: Describes who the main competitors of the business are and how they can affect the business’ performance. Market analysis: Describes targeted consumers based on their demographics, geographic location and psychographics. Marketing plan: How targeted consumers can be reached based on their demographics, geographic location and psychographics. Management summary: Introduces people who hold the key management positions and shows their responsibilities and their prior business experience. Financial Analysis: Shows whether the business is profitable, whether current operations are profitable and the current value of the business by providing a Profit and Loss, Cash Flow and Balance Sheet Account.
Why create a business plan?
Many stakeholders will require having a look at your business plan in order to initiate different actions that have to do with your business. For example, a bank will require checking the financial position of the business in order to assess whether a loan can be issued to the business. The bank needs to know if the business is able to survive in the future and thus, receive all the loan payments. On the other hand, investors will need to consider whether the business will survive in the long run and thus, provide a return on investment. The business plan can help investors determine whether the firm has a competitive advantage over competitors, whether its financials are healthy and whether the management is able to run the business successfully.
The Business plan should be created based on stakeholder preferences in order to make it easier for them to take fast decisions. If stakeholders find your business plan easy to read then the chances of receiving a positive reaction are increased. Imagine trying to find relevant information among a large pile of irrelevant information. The chances are that you will stop looking and reject the business. In Conclusion, the most important factor for a great business plan is to include rich information about the business that is related to the needs of the stakeholders.
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