A business plan is a written document that describes your business goals and the strategies you plan to use to achieve them. It also describes the organizational structure, the market conditions, the strengths of your product and reasons why you think your product will sell. Besides this, the business plan states the amount of capital you require to make the venture a success.
A business plan usually has three key parts. These are:
1. The business concept: This describes the industry, the structure of the business, the specific product, or service, and how the business will be conducted.
2. The marketplace: This section describes the potential customers and the competition. It mentions who the customers are and why they will buy the product.
3. The financial section: This lists the income and cash flow statement, break-even analysis and other relevant financial facts with respect to the proposed business. If you are not good in accounting you should hire a trained accountant to present the figures in the right format.
These three sections can be broken down into seven key components. They are the executive summary, business description, market strategy, competitive analysis, design and development, operations and management and financial factors. A cover, a title page and a table of contents are also necessary.
Usually a business plan is 15 to 20 pages in length though some companies prepare long and elaborate business plans that run into a hundred or more pages. However, it is not the length of the document that matters but the way it is presented. It always makes sense to present facts as concisely as possible. The investor is looking for ideas that can generate revenue. He does not have the time to go into extensive details. Thats your problem.
A concise business plan indicates a mastery of the concept. There may, of course, be times when a new business concept may need a lot of explaining. But this does not mean that you should draw up a long-winding business plan. The best business plans are those that explain the concepts simply and precisely. Also, the business plan meant to convince investors to commit millions of dollars should carry more facts than the one meant for internal use.
Business plans are not inflexible documents. They should be updated at the start of every new financial period. It can even be updated quarterly or monthly depending upon your companys goals. An update is also needed if you need additional funding or if there is a major change in market conditions. It always pays to keep your business plan current.
You should also revise your plan if there is a change in management or if a major milestone is crossed. A new high in sales or employment or a move to a new office may also necessitate an update.