Though, a business plan is a plan itself, your business plan needs some planning. Drafting a short strategic plan of about 2-3 pages can help you come up with a more detailed and comprehensive business plan. So, a strategic plan should be the foundation for your business plan.
Before you develop your strategic plan, you must clearly identify the status, objectives, and strategies of your business idea. This will be the basis for a critical examination to probe existing perceived strengths, weaknesses, opportunities, and threats.
Your strategic plan must cover the following issues:
Developing a realistic vision for your business is the first step of the strategic planning process. This vision is a pen picture of your business in the next three or more years, in terms of its likely physical appearance, size, activities, etc.
The mission is what reflects the nature of your business and indicates its purpose. An example of a business mission is:
“To develop, design, manufacture, and market specific products for sale on the basis of certain features to meet the identified needs of specified customer groups via certain distribution channels in particular geographic areas.”
A statement like this clearly indicates what the business is about, as against what obtains with a statement like, “We are into electronics.”
Another key element is to explicitly state your business’s objectives in terms of the results you expect it to achieve in the long term. Aside from presumably indicating a necessity to achieve regular profits, objectives should relate to the expectations and requirements of all the major stakeholders (including employees) and should reflect the underlying reasons for running the business.
You will also need to address the values governing the operation of your business and its conduct or relationships with the society, customers, employees, etc.
These are the guidelines for achieving the mission and objectives of your proposed idea. Strategies can either cover the whole business (including matters such as diversification, organic growth, or acquisition plans) or relate to primary matters in key functional areas, for example:
- The company’s internal cash flow will fund all future growth.
- New products will progressively replace existing ones over the next 3 years.
- All assembly work will be contracted out to lower the company’s break-even point.
Goals are specific interim or ultimate time-based measurements that you hope to achieve by implementing strategies in pursuit of your business’s objectives. For example, “To achieve sales of $50m in three years time.”
These set out the plans for implementing your key strategies.
You must also bear in mind that all the aspects of your strategic plan must be inter-linked and consistent with each other. This will be very hard to achieve if your major objective is to make yourself wealthy.
Preparing to Write the Business Plan
Before you start any detailed work on writing a comprehensive business plan, you should do the following:
- Clearly define your target audience using as many specific parameters as possible.
- Determine the requirements of the plan in relation to the content and level of detail required.
- Write an outline for the plan (table of contents).
- Decide on the likely length of the plan.
- Highlight all the main issues to be addressed in the plan.
The outline is the road map for your business plan. Below is an outline of a typical business plan:
- Executive Summary
- Company Profile
- Industry Research
- Sales and Marketing
Go Back to Chapter 4: The Basic Components of a Business Plan