BLOGS & THOUGHTS

Your business plan is the roadmap for your company.  A detailed road map that explains what the company’s goals are and how it will achieve them, where you are, how you got there, and how you plan to proceed. A business also needs a huge amount of money to start, to operate, to survive, and to grow. By putting more effort into developing a comprehensive business plan, you will have a more powerful tool to attract investors.

 

 

What is Business Plan

A business plan is a well-prepared  formal written document that defines in detail a company’s objectives, containing the goals of a business, the methods for attaining those goals, and the time-frame for the achievement of the goals. It also lays out a written road map for the firm from marketing, financial, and operational standpoints.

Business plan is a fundamental instrument for raising capital from venture capital firms or banks. It is an essential element  when taking your brand public or selling all or part of a company. In fact, without a decent business plan, soliciting a bank for funds is pointless. Business plan is also a reflection of your management abilities. An analytical, objective business plan convinces investors that you are capable and reliable. Investors receive an enormous number of proposals, your plan has to make a good impression, and must stand alone as an initial sales tool. 

 

 

How Does a Business Plan Work?

What’s the point in starting a business if there is no chance that the business will be profitable in the long run?

But in many cases, we somehow  start a new business without enough funds.  We need a helping hand. A business plan will demonstrate to potential investors how the proposed business will be profitable. Business plans, even among competitors in the same industry, are not identical. However, they can have the same basic elements, such as a description of products and services, a competitive analysis, a marketing plan, a management plan, and a financial projections. A plan also states how the business intends to achieve its goals. A business plan is 75% research that makes up the bulk of the plan and 25% format. 

 

Elements of Business Plan

• Brief and Executive summary: Provide a focused and brief explanation about your business, along with any information about the company’s leadership, employees, operations, and location. Your summary will give your target readers a first impression of whether your business is worth further scrutiny.
• Products and services: Describe your product/service in layman’s terms, including pricing, product lifespan, and benefits to the consumer. Explain any niche you may have. Discuss your competitive advantage — why people will choose your product over your competitors’, the benefits of your product/service, and how you will sustain your edge. Information about research and development can also be included here.
• Market analysis: A good product is not enough to guarantee marketing success. A firm needs a good handle on its industry as well as their target market. This section of the plan will detail your potential market, your estimated sales, your competitive analysis, and market feasibility and strategy.
• Financial Forecast: Business financing requires forecasts. These forecasts will demonstrate the need for funds and the potential future value of equity investments or debt repayment. Be sure to include : Operating profit and loss, cash flow statement, balance sheets, and break-even analysis.
• Budget: Every company needs to have a budget in place. A budget is a company’s planned course of operating during a period and generally is structured to motivate performance as well as communicate planning strategy. What you need to include in this part are costs related to staffing, development, manufacturing, marketing, and any other expenses related to the business.

 

 

Business Plan Example

Executive Summary 

ABC Coffee is an Indonesian based coffee roaster start-up that has developed a line of premium coffees and espressos. ABC Coffee has been formed as an Indonesian Corporation by the founder Elon Musk. Elon Musk has brought old world Indonesian traditions and recipes to meet the market need for premium coffees.

Keys to Success

ABC Coffee has identified three keys that will be essential to its success. The first key is the need to develop the most excellent coffee available. The second requirement is to develop a top notch customer service organization that exceeds customer expectations. The last part is to employ strict financial controls. The development and implementation of finance and accounting controls will help ensure fiscal success.

Target Market Segments

ABC Coffee has identified three distinct customer segments that it will actively pursue. The first group is made up of coffee houses, drive thru establishments, and espresso carts. This customer segment has 187 potential customers and is growing at a 7% annual rate. The second group is restaurants with 107 possible customers and is growing at an 8% annual rate. The last segment is grocery stores that sell unprepared beans to their customers in either whole bean or ground forms. This segment has 97 potential customers and a 7% growth rate.

Management

ABC is being led by the founder, Elon Musk. Elon has a proper educational background and a wealth of applicable industry experience. Elon received his Bachelor degree and MBA from Gajah Mada University. In addition, Elon has worked at several coffee shops, and has worked in Italy as a coffee roaster under the wing of an Italian master roaster.

Through a combination of a solid business model, strong educational credentials, and proprietary coffee roasting techniques, Elon will be able to turn ABC Coffee from a start-up business to a significant market player in the high-end coffee market in the Jakrta. Sales for year two are forecasted to be $312,000 rising to $355,000 in year three. Net profit is projected to be 7.58% for year two and will jump to 9.58% in year three.

1.1 Mission

It is ABC Coffee’s mission to offer the finest selection of coffees. By using the customs from a 54-year-old Italian master roaster, ABC Coffee’s products will surpass all of its competition. A strong customer service ethic will support the fantastic product.

1.2 Objectives

ABC Coffee’s objectives are to build brand awareness and customer service excellence, while increasing sales. ABC Coffee intends to utilize the following strategies to achieve these objectives:

• Develop a high-quality menu of different coffee blends.

• Provide an excellent service experience, anticipating the needs of the customers and delivering the best service.

• Leverage the old traditional Italian roasting methods to increase market penetration with the finest product available.

1.3 Keys to Success

ABC Coffee has identified several keys which will be instrumental in the success of the company.

• Develop the finest product.

• Exceed customer expectations.
• Employ strict financial controls.

 

The Considerations 

1. Can you prove that there is sufficient demand for your product or service?  You have to provide evidence that there is a customer base for the product or service you want to offer. 
2. Is there any sustainable competitive advantage? It is essential to be unique and valuable, to stand out among the competitors.
3. Are you being realistic enough? Investors typically are skeptical when the projections seem too good to be true. Don’t be overly optimistic and naive. Be realistic, make sure you can back up your projections with reliable data.

 

Conclusion

Preparing a business plan is not easy, it will take time and effort, but it is well worth your investment in the long run. Business plan will not only provide valuable information to your potential investors to seek funding, it will also lay out the game plan from which to operate your firm. Business plan, will become your blueprint and direct you towards achieving your overall business goals.

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