A business name, business plan and other documentations are important a structure for the business. Before you begin writing a business plan, you have to know the purpose of the business plan. May do not write a plan because they do not know the purpose of the business plan.
The importance of planning cannot be overruled and it takes dedication and commitment to develop a plan. A business plan is a document that helps you plan your business. The question now is, what is a business plan and what are the contents of a business plan.
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A business plan is an organised formal document containing the necessary information about an organisation. It usually contains the business name, aims and objectives, financial implication, marketing strategies, operational plans, SWOT analysis, business description, competitors, etc.
See Also: How to write a business plan step by step.
A business plan is necessary for the growth of any business and serves as a prerequisite since it is mostly done at the inception; it enhances understanding of what the business is all about.
See Also: How to create your business model using the Business Model Canvas.
Still wondering what the purpose of a business plan is? Let us walk you through some.
Purposes Of A Business Plan
A Business Plan Brings Out Clarity Of Idea
One of the first and most important things in a business is the clarity of idea i.e., what you specifically want to do and why you want to venture into that kind of business.
Once an idea is conceived, putting it down on paper should be the ultimate goal. It is usually done before other logistics such as getting an office or hiring a manager. Without a clear idea, goals and objectives will not be prioritised, giving room for errors.
In doing this, inspiration can be drawn from mother companies or respectable brands in society. For example, entrepreneurs who seek to venture into the fashion hub can get a clearer vision of ideas from Gucci, H&M or Versace. This will help to refine an idea in order to stay focused and organised.
See Also: Reasons why you need to write a business plan.
A Business Plan Tracks Progress
Basically, we can say that success means different things to different businesses. But no matter what your idea of success is, there is a need to track it. When there is a business plan, there will be clarity of ideas and goals, strengthening the will to meet targets promptly.
In this case, the plan will be a map showing transitory phases as time goes on. It will also be a reminder of the set goals and how unnecessary changes can affect the initial dream.
When your plan is clearly stated, it becomes a tracking system for action steps and progress as well as a substantial means to identify potential problems.
See Also: A business plan template to follow in writing your business plan.
Distinctiveness From Other Competitors
A business plan well-tailored helps you to know your rivals in the industry. Here, it is important to note that if you fail to create a powerful and distinctive difference for your customers, your product and services will be viewed as the same.
You must strive to market with a difference in other to outsmart your competitors. A business plan avails you the opportunity to create a distinction in your sales and marketing approach. If your sales process is so dynamic that your prospects see you and your vision as irresistible, it renders your competitors irrelevant in the industry.
See Also: A business plan sample that can be adapted for your business.
Mapping Out Operational Plans
This involves the how, where and when the business will operate. It gives a clear explanation of the direction, services and the path to thread. It can be a vivid diagram of the strategy to document the team’s primary goals. Good planning contains all necessary information and demonstrates explicit relationships between the company and customers.
One of the purposes of a business plan is to provide the opportunity for a value proposition. It enhances value creation with internal business processes, i.e., drawing out clear strategies on how to fashion out suitable policies with regard to the team. In doing this, you will know the kind of work to be done, investors to approach, provision of financial plans and the number of teams to build.
Building a strategy map or operational plans puts your business financial perspective in check. It helps you navigate with the goal in view.
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It Is Easy To Source For Fund With A Business Plan
In present-day society, no one wants to finance a business without an appropriate structure. Financing is mostly done with legal backing where a lot of considerations are made before support is given.
Financing begins with the start-up costs and expenses and then with the business expansion and new product development. It is also necessary to plan the commercialisation chain, and estimate costs, revenues, cash flows and financing tools.
Financial analysis and projections are important and must be very reasonable and sincerely accurate for supporters. Companies, investors, banks or other lending institutions will certainly want to see how you plan on running your business, and what your expenses and revenue projections are to know if your plans for the future are attainable.
These can all be answered by a well-written and effective business plan. It simply gives investors and lending institutions accurate knowledge of what the business entails.
See Also: Sources of funding for small businesses.
To Cover Milestone
When there is a sense of direction, paddling the canoe will not be a difficult task for the driver. When a plan is documented, the direction is made easy. This will avail you the opportunity to visualise your company’s future if they are commensurate with your progress as you proceed.
It is important to note that visions can be improved on and you can as well update your milestones when the previous becomes less useful or archaic.
Although the purpose of setting milestones is to evaluate your progress, sometimes it is necessary to take a deep breath and redirect once the business expands. In lieu of this, it is useful to have both short and long term plans and to align them so that sequences of short-term goals lead you to the long term objective.
See Also: How to get capital to start your own business.
A Business Plan Helps Analyse Customers’ Needs
No entrepreneur can thrive without careful consideration for the target audience. This will enable you to have a brief thought on what the potential customer’s needs are, how the product and services you want to provide will benefit him, or proffer solutions to his problems. This is basically the most important in a business plan and a good way to convince customers of brilliant opportunities.
Without the right combination of information and a good channel for delivering it, even higher products have a challenge gaining momentum in the marketplace. If you can show the investors that you already have customers available to purchase your products or services, this makes your plan more convincing.
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Projection Of Staff Strength
A business plan serves as a good way to envisage the number of staff that should carry out the daily activities of an organisation. In doing this, you show the investor a clear indication that your team is a group of dedicated, well-intentioned people with a strong will to succeed.
A business plan is written to give a glimpse of the team’s level of efficiency and productivity. It shows a great level of performance that uses minimal input to create great amounts of outputs. It can be expressed as the ratio of the outputs to the inputs used in the production process.
Forecasting New Opportunities
This serves as a good way to plan ahead for business growth and expansion. Once you have a good understanding of the company goals and areas of expertise, the next step is to analyse the market, assessing the consumer’s needs and how they can be helped.
Opportunities can also be found by analysing substitute industries and their loopholes. This type of analysis helps to establish a competitive advantage against indirect competitors and available insight on additional opportunities for growth and expansion.
Using a variety of analyses will expose your business to a whole slew of opportunities and help create long-term strategic plans. Once opportunities are recognised, organisations must move quickly to create a plan.
See Also: Business challenges faced by entrepreneurs in Nigeria.
Concentration On Your Area Of Expertise
Not all market opportunities identified can succeed, but a careful selection of the exact one to venture into will give answers to the blurry future. In view of this, distraction and lack of focus can malign any startup, bringing it to an abrupt end.
Therefore, startup founders who are busy and engaged in diverse pursuits need to focus on a particular one or aspect and watch it grow before embarking on other activities.
Above are some of the purpose of a business plan. Now that you know the purpose of a business plan, it is time for you to write your business plan. Contact us today on WhatsApp- 08038874148 to write your business plan.
The business plan enables you to be productive with each minute that you have by choosing a task that is achievable.
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