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What is a business plan?

A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organization or team attempting to reach those goals.

Business plans may target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their annual return in that time-frame. A good business plan is about 40-48 pages long. More than that and you risk tiring your potential investors.

1. How the audience influence the content

Business plans may be internally or externally focused. Externally focused plans target goals that are important to external stakeholders, particularly financial stakeholders. They typically have detailed information about the organization or team attempting to reach the goals. With for-profit entities, external stakeholders include investors and customers. External stake-holders of non-profits include donors and the clients of the non-profit’s services. For government agencies, external stakeholders include tax-payers, higher-level government agencies, and international lending bodies such as the International Monetary Fund, the World Bank, various economic agencies of the United Nations, and development banks.

Internally focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization. An internal business plan is often developed in conjunction with a balanced scorecard or a list of critical success factors. This allows success of the plan to be measured using non-financial measures. Business plans that identify and target internal goals, but provide only general guidance on how they will be met are called strategic plans.

Business Plan Evolved – US Letter 2Operational plans describe the goals of an internal organization, working group or department. Project plans, sometimes known as project frameworks, describe the goals of a particular project. They may also address the project’s place within the organization’s larger strategic goals.

Business plans are decision-making tools. The content and format of the business plan is determined by the goals and audience. For example, a business plan for a non-profit might discuss the fit between the business plan and the organization’s mission. Banks are quite concerned about defaults, so a business plan for a bank loan will build a convincing case for the organization’s ability to repay the loan. Venture capitalists are primarily concerned about initial investment, feasibility, and exit valuation. A business plan for a project requiring equity financing will need to explain why current resources, upcoming growth opportunities, and sustainable competitive advantage will lead to a high exit valuation.

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Preparing a business plan draws on a wide range of knowledge from many different business disciplines: finance, human resource management, intellectual property management, supply chain management, operations management, and marketing, among others. It can be helpful to view the business plan as a collection of sub-plans, one for each of the main business disciplines.

2. Formatting your business plan

The format of a business plan depends on its presentation context. It is common for businesses, especially start-ups, to have three or four formats for the same business plan.

An “elevator pitch” is a short summary of the plan’s executive summary. This is often used as a teaser to awaken the interest of potential investors, customers, or strategic partners.

A pitch deck is a slide show and oral presentation that is meant to trigger discussion and interest potential investors in reading the written presentation. The content of the presentation is usually limited to the executive summary and a few key graphs showing financial trends and key decision making benchmarks. If a new product is being proposed and time permits, a demonstration of the product may be included.

A written presentation for external stakeholders is a detailed, well written, and pleasingly formatted plan targeted at external stakeholders.

An internal operational plan is a detailed plan describing planning details that are needed by management but may not be of interest to external stakeholders. Such plans have a somewhat higher degree of candor and informality than the version targeted at external stakeholders and others.

3. Typical structure for a business plan for a start up venture

  • cover page and table of contents
  • executive summary
  • mission statement
  • business description
  • business environment analysis
  • SWOT analysis
  • industry background
  • competitor analysis
  • market analysis
  • marketing plan
  • operations plan
  • management summary
  • financial plan
  • attachments and milestones

Business Plan Evolved – A4 Portrait Template 124. Typical questions addressed by a business plan for a start up venture

  • What problem does the company’s product or service solve? What niche will it fill?
  • What is the company’s solution to the problem?
  • Who are the company’s customers, and how will the company market and sell its products to them?
  • What is the size of the market for this solution?
  • What is the business model for the business (how will it make money)?
  • Who are the competitors and how will the company maintain a competitive advantage?
  • How does the company plan to manage its operations as it grows?
  • Who will run the company and what makes them qualified to do so?
  • What are the risks and threats confronting the business, and what can be done to mitigate them?
  • What are the company’s capital and resource requirements?
  • What are the company’s historical and projected financial statements?
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5. Typical uses of a business plan

  • Venture capital
    • Venture capital assessment of business plans – focus on qualitative factors such as team.
    • Business plan contests – provides a way for venture capitalists to find promising projects.
    • The better the business plan, the better your chances of landing that big initial investment.
  • Within corporations
    • Fundraising is the primary purpose for many business plans, since they are related to the inherent probable success/failure of the company risk.
    • Total quality management (TQM) is a business management strategy aimed at embedding awareness of quality in all organizational processes. TQM has been widely used in manufacturing, education, call centers, government, and service industries, as well as NASA space and science programs.
    • Management by objectives (MBO) is a process of agreeing upon objectives (as can be detailed within business plans) within an organization so that management and employees agree to the objectives and understand what they are in the organization.
    • Strategic planning is an organization’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. Business plans can help decision makers see how specific projects relate to the organization’s strategic plan.
  • Education
    • Business plans are used in some primary and secondary programs to teach economic principles. Wikiversity has a Lunar Boom Town project where students of all ages can collaborate with designing and revising business models and practice evaluating them to learn practical business planning techniques and methodology.

6. What is the best software to create my business plan?

While most of people tend to use MS Word, is not such a great choice. The end result look unpolished and let’s face it, a bit out of fashion. You might want to have more flexibility while creating & formatting your tables, text and charts. According my opinion Adobe Indesign is the best tool for any job that involves designing documents more than 6 pages long. Here is why:

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Adobe Indesign has Master Pages

So you could quickly make changes to the layout of entire sections, by editing a single Master Page. You have second thoughts on where the page numbering should go? Or the repeated page elements? Change the master pages & the changes will affect all pages of that section.

It has Paragraph & Character Styles

Character & paragraph styles can help you define the formatting attributes that will be applied to the various text elements of your business plan. If for example you want to change the color or size or font of the titles, simply adjust the appropriate paragraph style and all other titles that share this paragraph style will get updated automatically document wide. Unlike MS Word you also get to use expert & advanced typography features that will make your text more attractive & easier to read.

Global Swatches

You are about to finish and you realize that you don’t really like the blue color you put everywhere? If you properly implemented global swatches in your Indesign document you can change the entire color scheme by simply changing the global swatch!

Table of Contents

Its possible to have your table of contents generated automatically by indesign, and then get easily format it with your paragraph or character styles. So if you make a few changes in the section titles you can then automatically update the table of contents, to match your changes.

Editable vector charts

You can fully edit vector charts in Indesign, change their colors & shape and place them exactly where you want them to be.

 7. What if I don’t know how to use Indesign?

In this case you can either hire a professional designer, or use a template that includes some or all of these features. Editing a well designed template in Indesign is almost like editing a document in MS Word. You simply type or copy/paste your text and it automatically retain the appearance the designer had intended by inheriting the used paragraph style. Also adding your own images is a matter of drag and dropping them. To do more than that you will need a working knowledge of Indesign. But since you are dealing with a ready made template, you can go by with a very minimal Indesign knowledge. Luckily for you the designer did all the hard work 😉

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This Articles’ text is licensed under the Creative Commons BY-SA License since it partially uses material from Wikipedia.

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