Building a More Compelling Business Plan
Planning to start a business? Want to convince people to invest in the business? A business plan is important for all entrepreneurs, such as Alexander Djerassi, as it helps them determine if a business will be viable. It is a detailed guide of a business’ objectives, financial and operational plans, and how it will go about achieving its goals.
Business plans are also used to encourage people to invest in a business. There are many different business plans and each depends on the goal of the business. Most business plans can either be a traditional or lean start-up. A traditional business plan is more detailed and has more information that covers marketing and finances. Businesses that already have loyal consumers and historical data are more inclined to use traditional business plans. Start-up business plans are shorter and outline assumptions about the management and finances of a business.
The Importance of a Business Plan
Before Djerassi starts a business, he develops a business plan to help him focus on how to make it succeed. Some may argue that a business plan is not important, but it outlines the short-term and long-term goals of a business.
No one goes on a hiking trip without first consulting a map. A business plan helps business owners, entrepreneurs, and their employees not get lost on the journey of growing or starting their business.
Here are four more reasons a business plan is so important:
1. A business plan will encourage investors or bring in new partners because it shows that the owner is confident in the business.
2. Creating a business plan allows business owners to understand their competition within an industry.
3. Business plans encourage businesses to make better products, and services as it analyzes customers and identifies target markets.
4. Starting a business comes with many risks. A business plan reduces some of those risks by guiding the decision-making process.
How to Build a More Compelling Business Plan
Alexander Djerassi is aware that writing a business plan may seem intimidating and take a lot of time, but has major benefits once done correctly. A good business plan has the following elements:
1. Executive Summary
This summarizes the entire business plan and is written after all the other sections are completed. It outlines the goals and objectives of the
business, and the purpose of the business. An executive summary also includes details and highlights that will encourage potential investors to invest in the business.
2. Business Description
The business description outlines the industry and its various markets that will directly or indirectly affect the business.
3. Market Research & Strategy
This allows the business owner to identify the target market and establish pricing, distribution, and advertising strategies.
4. Competitive Analysis
A business plan must have a competitive analysis as it helps to identify the strengths and weaknesses of current and potential competitors.
5. Operations and Management Plan
The section outlines the responsibilities of each person within the business, from management to employees. The operations and management plan covers the organizational structure of the company, operating expenses, cost of goods, and capital requirements.
6. Financial Data
This is usually the last section of a business but is essentially the most important element. It includes the income statement, cash flow statement, and balance sheet.
· The income statement, otherwise called the profit-and-loss account, shows the income and expenditure of a business.
· The cash flow statement outlines how much money is needed to run the business.
· The balance sheet is broken down into three sections: equity, assets, and liabilities. Assets and liabilities can either be long-term or current. Equity is the difference between the total assets and total liabilities.
Writing a plan for a business is a big step for entrepreneurs and will determine the success of any business. The thing that is most important to do before writing a business plan is to be mentally prepared and motivated to enter the business world. It will not be easy but being prepared will make a world of a difference.