Understanding a Business Plan

What is a business Plan?

               A business Plan is simply a road map to the destination you want to reach in your business. Writing a good business plan will be a first step to success. Some people take business plan just as a finance obtaining tool but it is much more than that. It helps to put all aspects of business together.  After starting the business it helps you to monitor your progress, keep yourself accountable and control the future activities of business.
           
                A number of businesses start every year and close down within three to five years. The reason is lack of funding, lack of commitment and most commonly lack of future planning. A good business plan can overcome these problems easily, for example a proper financing plan can overcome lack of funding and vice versa. A plan makes targets in all major areas of business like sales, marketing production etc

Reasons To Make A business Plan:

Following are some general reasons for making a business plan:

1. A business plan helps to document all the related things about business and give a clearer picture of where we stand and where we have to reach.
2. It works as a document for obtaining finance from banks etc
3. It determines the amount of funds to start a business
4. It gives a clear picture of goals and objectives of business
5. A business plan determines the milestones for the business
6. It's a controlling and monitoring tool for measuring the performance of business 
7. Business plan also helps to identify time periods and performance required in each period to reach a goal in some specific time period
8. If goals are not achieved in specific period than business plan will help to identify the mistakes and obstacles to achieve the goals. So we can find the ways to correct those mistakes and reduce the risk of future failure
9. managing cash flows become easier
10. it helps to forecast future and save from unnecessary delays and losses
11. A SWOT analysis in business plan determines its strength, weaknesses, opportunities and threats.
12. Any area of business is not neglected and get planned properly
13. it decides priorities and risk factors for business
14. it gives a value to business
15. It helps better understanding of market, competitors and give a clear target
16. it enables a business to improve its performance and take it to growth
17. and most importantly it helps to start business in a structured manner 

4 Essential Things to Do Before Writing a Business Plan

1.Initial Planning:

Before writing a business plan it is essential to decide few things

1. length of time period for which u want to write a plan
2. Determining goals and objectives
3. Estimating financing needs
4. Recognizing the market for your product
5. Potential Customers
6. Class, ethnicity and economic condition of potential customers
7. Geographic location of your market

Keep in mind that a plan is how you are going to hold the future of your business. As an owner you yourself will enjoy the success or suffer the failure. So make sure to be very clear in doing everything. all the planning must be based on facts,not just judgments or plain study of existing competitors.

2. Assessment Of Potential Market

Keep your self as clear as possible about the size potential market of your product. First define smaller,targetd and more defined group of your customers.For example if you are going to sale clothes, everybody needs the clothes in this world. but you cannot sale in whole world. so you may  target young teen girls in a certain community. After deciding this you can now answer the other questions like identification of competitors, number of outlets required, fashion and affordability level of that community, likes and dislikes,  weather changes etc.

3. Identifying Initial Requirements:

After having a clear picture of customers and related demographic facts now its time to determine that what you actually need to start this business regarding

• Funds personal funds and potential ways of obtaining financing
• Employees : no.of employees,required knowledge and expertise etc
• Tangible Materials like furniture,stationery,vehicles etc
• Product design,research,plant,advertisement etc

4. Planning The Product And Identify Potential Locations For the Business

Planning the product is most important and critical part of your homework before writing business plan. Because Product is the thing you are going to offer your customer and all other things depend on it. First you should plan about the samples. you should be clear about whether to hire people for preparing samples or get them from somewhere. whether product need research and development or not.and note down all other related things like Quality standards about your product and if there are any laws.
Finding a suitable place for the business can be difficult and need research. Estimate the affordable places and minimum area you require. Be careful about the location and neighbors of available places.