What is Business Plan
A business plan is a standardized written document outlining the company’s organizational, financial, and operating framework. A good business plan gives potential investors the right insights into the company’s current state. Also an idea of how it becomes an investment opportunity in the future. It is a prerequisite for any startup to begin with and to attract more investors. In short, a business plan conveys the company’s goals, both short-term and long-term.
Planning helps to strategize, find problems and the competition of an organization, and ways to overcome them too. Moreover, it includes overall structure, marketing and positioning strategy, and fund required by the company for the long run.
For most startups, it serves as a dual-purpose document used internally and externally.
Importance:
- To set KPIs and benchmarks: Having a good plan helps the company frame its goals and benchmarks more precisely by aligning with its long-term vision and strategy.
- Decision Making: A viable plan helps entrepreneurs to make critical decisions regarding its core strategies and helps them understand how those decisions will impact the overall business.
- Roadmap Planning: A good business plan describes what the business intends to be doing over time through a detailed description of the customer, market, competitors, and current and future strategies.
- Funding: Prospective investors and banks require the startups to prepare a detailed business plan for them to understand and decide whether the business has the potential to earn profits in the long run or not.
- Partnership and alliances: It also helps in the smooth execution of the planned business models and enters into collaboration with the desired partners by explaining to them the roles and future vision of the company.
The Major Types
- Standard Business Plan: Standard business plan covers details like the mission, vision, financial statistics, and target audience, which is usually comprehensible for all parties like product vendors, VCs and investors, finance firms or even internal business members. One of the actual merits of this kind of business plan is that it describes the expenses in detail along with the information regarding profit and loss, cash flow, and projected balance sheet.
- Growth Business Plan: A growth plan gives insights into the proposed strategy, execution mechanism, various parameters, and metrics to aid assessment and the necessary statistics and numbers. A well-defined strategy finds solutions to the identified problem, the target audience, and how to approach them. Whereas an execution plan states the methodology to implement the strategy by elaborating each step of the process in detail. Metrics measure the current performance against the set benchmarks. Finally, the plan also includes reliable statistics, charts, and tables to convince investors of the projected growth.
- Lean Business Plan: Lean plan is an optimized version of a standardized business plan and shares similarities with a growth plan.
- Strategy: This phase states what the company wants to achieve and how it will achieve it. Working in line with sound strategy helps the management from unnecessary waste of time and effort.
- Tactics: Tactics are measures taken to make the strategy result in maximum efficiency.
- Assumptions, metrics and schedule: Assumptions without benchmarks are meaningless. And benchmark comes through the use of established milestones and metrics. Further, to ensure that things go as planned, it’s essential to follow the proper schedule.
- Forecast: Financial forecast relating to sales, revenue and expenditures must be entirely accurate. And making basic predictions plays a crucial role in adding credibility to the business plan.
- Reviewing: Once the business plan is completed, quality time be invested in reviewing the documents. There should be 3-4 rounds of iterations required to increase the efficiency of the business plan.
- Internal Business Plan: Internal plan is similar to a lean strategy, but it delivers results within the organization. It is not made available to investors or any other external entity; it is specific to the employees.
- Operations Business Plan: This kind of plan defines the company’s annual operations by mentioning the deadlines and requirements for the financial year. Operations plans also highlight the KPIs (Key Performance Indicators) and KPAs (Key Performance Area) for employee evaluation, along with the milestones to be achieved.
- Feasibility Business Plan: As the name suggests, it determines whether the proposed product or service will be feasible or not in the future. It also determines the potential investors, intended demographics, and the recommendations required for the business to be ongoing.
- OnePage Business Plan: A one-page business plan will be concise, defining the milestones, objectives, and actual numbers summarised within a page.
- Strategic Business Plan: The strategic plan overlooks the financial description and focuses more on the strategy and tactics to achieve the objectives.
- Contingency Business Plan: The contingency plan details the alternate course of action if the primary strategy fails because the probability of facing a loss is the same, just as the chance of being profitable.
- Startup Business Plan: Often considered as a version of the lean plan, a startup plan is prepared by new businesses to attract VCs and investors.
Essentials of a Good Business Plan
It is essential for attracting investors and fundraising. It also helps companies articulate their mission and vision and plot their growth trajectory. As such, it cannot be just a bulleted list. The plan needs to be a serious business document with the following size elements:
- Executive summary: Executive summary should contain a brief overview of the entire business plan. This section is critical in a business plan because it decides whether the stakeholders will continue reading the project or not. It gives a brief overview of the business idea, the target market, goals, competition, USP, the overall team, and the financial outlook for the business.
- Company Description & Synopsis: This part of the business plan explains the company’s mission, philosophy, goals, industry and legal structure, USP, i.e. the problem the company is solving for its customers and the solution which makes it stand out from the competition.
- Market Overview: This section explains the current market scenario of the whole industry, covering aspects like the size of the market, trends, customer’s needs, competitor details Etc. with reliable facts and figures needed to substantiate the overall market scenario.
- Customer Analysis: Customer analysis gives details regarding customers like customer demographics, geographics, psychographics, needs, wants, desires and buying habits Etc.
- Product/Service Overview: This section gives a detailed overview of the product and services offered by the company.
- Business Model: The business model gives an overview of how the company approaches the market and how the approach is viable.
- Revenue Model: It explains how the company is planning to make revenue through its business model by stating the expenses and revenue sources.
- Competitive Analysis: It explains who the competitors and their USPs and the strategies used by the company to tackle the competition.
- Marketing Plan: This part explains how the company uses the above details in formulating and executing the marketing strategies. This part is crucial since it describes how the company plans to reach out to its customers and stand out from the competitors.
- Management Team: Gives details of all board members, their qualifications, experience, and designations.
- Funding & financials: It is the final and essential part of a business plan, especially for startups, since it states the cost of the execution of the business plan. It also includes all short-term and long-term financial requirements, funding goals, and how the investors can help the company achieve them.
How does Scaalex come into the picture?
Most startups fail to raise funds from investors. This is because of the lack of knowledge on how to execute the financial models. Further, they have to struggle without proper market research, financial plan, model, and so on.
Scaalex is a team of top domain experts and financial consultants. We closely worked with 270+ startups to build financial projections, valuation report, business plans, and funding advisory. We stand for an expert team with in-depth market search and also understand the expectations of new entrepreneurs. If you are one among the startups who lack adequate financial insights; reach out to us to attain exceptional execution and fundraising results!
Related Blog: Tips to Improve Your Business Plan
