Do you want to increase your chance of success in business world?
Or you are in dire need of loan and investment?
The answer is simple write business plan
Business plan shows what your vision and goal for your business is and most importantly how to achieve those goals.
Before, many small and medium scale business see business plan has a big task that add no value to their business, but with the increase awareness of how business plan can give business a direction, which will lead to growth and development they’ve taken it up and you should do too.
Business plan not only shows direction of your business it also serves as a means of obtaining loan and investment, you never know you might need loan in the future.
Feasibility study vs Business plan
Feasibility study tell you if your business will be profitable and how profitable it will be in a proposed location, it is done before you start a business, while business plan highlights your objective, goal and strategy to reach them, in short, it detail how you will move from small business to big business.
Types of business plan
Thanks to lean business plan, there are two business plan to chose from which are:
Lean business plan
This is a one page business plan, that contain all the important details of a business. It was coined from a believe that business is an experiment which can sometime move away from its original idea.
Imagine if you have written a well detail plan for your business idea and later pivot to another in less than 6 months, you will agree with me that it’s a waste of time. With all been said lean business plan is mostly suitable for tech startup who are starting what little or nobody is doing.
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Traditional business plan
If you are in Nigeria or intend to operate a small and medium scale business, you will do well to forget about lean business plan or keep it to yourself, because no bank or investor in Nigeria will take it from you.
They want the detail type of business plan they care less if you pivot or not, they want something to hold on to.
What you need to know before writing a business plan
You need information
You can’t know all the information needed to write a well detail business plan offhand, information like competitor’s revenue, sale forecasts and profit margin, so go out and do research both online and offline.
Executive summary should be written last
Executive summary summarise your whole business plan. It is the first thing your banker or investor will look at, therefore it should be written last so as to contain the most crucial part of your business plan.
Make the business plan short and consise
Do not write vague business plan with bunch of words without fact, instead let your business plan be short and concise for easy digestion by the reader, believe me no one want to read a never ending business plan there is no time for that in this rushing world.
Have it in mind that you will always correct it
One of the thing you can do to catch up with the one page business plan is to update your traditional business plan every time so that it it will reflect any changes even if you pivot you might not totally abandon the business plan.
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Your figure should be close to real
If not real, whatever financial figure like accounting, cost of goods, estimated revenue and profit should be close to real.
You can achieve this by taking the average figures of all your competitor, in a case where you can only vouch of one competitor data reduce the figure when writing your one business plan for instance if your competitor have #1,000,000 as their annual revenue reduce it to #8,000,000 it will make up for any unforeseen or future cut in revenue.
Why are you writing the plan
While most of the business plan is gear towards loan or investment, your own might be deferent so know and write down your reason of writing business plan, it might be only for you and not for financial institution.
The deference between the two is that you don’t need to pour soul and spirit into it if you will be the only reader of your business plan.
Unique selling preposition
Before you pen down your plan, think about your business and what make it unique or deferent from the other competitor, no business is the same, yours will be surely deferent you just need to find it.
This is another way to hook your investor. Also the more you differentiate your business the higher you will be above competition.
Now that you know the tips of business plan, it is time to write the business plan. Below are the bone and flesh that you must include in your business plan
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Executive summary A.K.A the hook.
Executive is the first thing your reader or investor will look at, while it should be short and concise it should also contain all the important factors such as
- Your business vision and mission
- Company profile
- Product or services
- Employee information
To have a well detailed executive summary it should be written last.
This is where you describe your business activities, what problem does it intend or already solving, this is the best stage to write the reason for starting your business, what motivate you to chose this business among all the business that exist in Nigeria.
Below are the question you should answer briefly in this stage
- Who are your target customer?
- What is your business model?
- Where is your location?
Any competitive advantage (Degree, Domain expert, Technical know how)?
Market is the back bone of every business, you can have great product and still fail if your marketing strategy is poor, financial institution know this that is why they take time to digest market analysis of a business plan.
Here you write out your target market and how to reach them. To make your business plan effective you need to narrow down to Total Addressable Market (TAM) for instance while you can sell exercise book to every student in Nigeria (your target market) you will want to narrow it down and focus on primary school or secondary school (TAM).
Your market analysis should also contain, revenue forcast, milestone and advertising medium to reach your target customer.
Organisation structure and executive
Who does who in your business, highlight it and show the profile of your management team. If the purpose of your business plan is to obtaining loan or investment make sure you have executive with wow profile.
If you can do this it will signal to financial institution that you are capable and will do anything to make your business succeed. Trust me financial institutions have money to investment but scare of loosing it, prove to them you are capable and you will get the money.
Product or service
Use this section to explain in detail what your company is selling or intend to sell, is it service or product? Write down the process of obtaining the product, make sure the core of your product or service is not outsource, investor hate this they won’t even bother to go on with your plan.
For instance a web developer company that have no programmer but outsource its development to other company, isn’t that bad?
This is trickey, in this section you will write how you plan to drive sale for your product or service, is it that you will lower your price and reduce quality or increase your price and increase quality.
While both are debatable, the best sales strategy in Nigeria is to find a way to lower your price while increasing the quality of your product or services.
Here you write down, why you think your business will win at the long run, write out your SWOT analysis and compare it with your competitors SWOT, is there a loop hole you can use to win the competition at the long run?, what are the thing you can do that your competitor will find it hard to try.
Financial statement and projection
Show me the number as Strive Masiyiwa used to say (Econect founder). This is where you prove to your reader how profitable your business is and will be.
Please use accurate figure gotten from your research, do not come up with any number it will later affect your business and no financial institution will invest in your business because they will know.
Below are what you must include in your financial statement:
Income statement show your profit or loss after deducting your cost of production from your revenue. It is calculated monthly or quarterly.
Balance sheet show the worth of your business, it a simple calculation you add up all your asset and subtract your liabilities (what your business owe another business , individual or institutions) from it.
Cash flow statement
Cash flow statement show how money is going out and coming into your business and most importantly amount of cash at hand. It is calculated monthly or quarterly. For a new business try to calculate your business every day at least for the first 6 months.