Why do You Need a Business Plan?

In developing a business idea, there is a need for potential entrepreneurs to adopt a carefully moderated and intelligent approach.

Business Plan (or Feasibility Report)

Planning is a process that never ends for business. It is extremely important in the early stages of any venture when the entrepreneur will need to prepare a preliminary business plan.

There are different types of plans that may be part of any business operation. These include financial plans, marketing plans, human resource plans, production plans, sales plans, etc. Plans may be short-term or long-term or maybe strategic or operational.

Whatever the type of plan or the function, plans have one important purpose; to provide guidance and structure to management in a rapidly changing market environment.

A Business Plan on the other hand is a written document prepared by the entrepreneur that describes all the relevant external and internal elements involved in starting a new venture. It is often an integration of functional plans such as marketing, finance, manufacturing, and human resources.

It also addresses both short-term and long-term decision-making for the first three years of operation. Thus, the business plan, or road map, answers the strategic question of Where am I now? Where am I going? And how will I get there? Potential investors, suppliers, and even customers will request or require a business plan.

Preparing a Preliminary Project Proposal

This should be structured according to the following key headings, keeping each section as brief as possible. If a heading is not relevant to the project, simply ignore the unrelated heading.

1. Background: in this section, establish the context of the project by giving an account of the problem it is trying to address.

2. State of the art: give an overview of existing and emerging technology in the field, including an account of rival technologies and a comparison of the advantages and disadvantages of the various options.

3. Proposal: give an overview of the proposed project and the approach, i.e. the activities which will be undertaken to achieve the project objectives. Clearly establish the research element or novelty component in the proposal.

4. Consortium: give an overview of the proposed manpower and establish the required ability to carry out the project successfully (e.g. skills, competencies, etc.)

5. Objectives and Deliverables: Identify (1) the objectives and (2) the deliverables of the proposed project.

6. Competitiveness: if applicable, establish the competitiveness or advantages of the proposed solution compared to other solutions, whether these already exist or are still being researched.

7. Cost: give an overview of the project cost (including start-up cost and working capital requirements).

8. Impact: this section should include:

1. Markets and Uses: identify possible uses and markets for the deliverables of the project.
2. Benefits and Beneficiaries: identify the beneficiaries of the project’s results (e.g. the project participants, the general public, third parties) and the manner in which they will benefit.
3. Roadmap: give an indication regarding what further steps, effort, costs, and timeframes are necessary before tangible benefits can be realized from the deliverables or results of the project (unless these are realized within the lifetime of the project).
4. Spillover Benefits: identify any secondary benefits of the project (e.g. facilitating participation in funding programs, improving Malta’s ranking, strengthening Malta’s reputation in a particular area, etc.)

Related: Processing Time and Other Things to Consider When Forming an LLC

Preparing a Detailed Business Plan

Stages of writing a business plan are; After deciding to go into business, before starting the business, and when updating is required.

Business plans can be written for retail business, wholesale business, service business, manufacturing, and any other type of business.

A business plan is written by:

• Identifying all the questions that could be asked about the business.
• Determining what further information needs to be gathered to answer all the questions.
• Obtaining all the necessary information.
• Comparing various alternatives
• Making a decision on each question.

A business plan should:

• Have a good appearance
• Provide an index
• Provide a summary
• Number each copy
• Be signed to show who is submitting it.
• Depend on the nature of the business.

A business plan should be organized to carry a cover page, table of contents, executive summary, business description, marketing plan, organizational plan, operational plan, financial plan, and appendices.

Outline of a typical business plan

1. Title: Feasibility study Report on______________________
Commissioned by_________________________
2. Project consultants
3. Table of contents:

• Executive Summary
• The Report
• Project Background
• Objective of study
• Project description and
• Loan advancement
• Promoter
• Location

Market and marketing plan

• Potential customers
• Competition
• Pricing
• Sales Tactics
• Advertising and Promotion
• Distribution.

Technical Feasibility and management plan:

• Factory
• Machinery
• Overhead charges
• Packaging materials
• Raw materials Manpower and Labour costs.

Financial Projection/Feasibility:

• Overview on capital requirement
• Financial plan
• Projected cash flow
• Projected profit and loss account
• Projected balance sheet
• Break-even analysis
• Source and application of funds

Organization Plan:

• Form of ownership
• Identification of partners/Principal shareholders
• Authority of Principals.
• Management team background
• Roles and responsibilities of members of the organization

Assessment of Risk:

• Evaluate weakness of business
• New technologies
• Contingency plans.

Schedules:

• 12 months projected sales
• 12 months projected purchase
• Fixed Assets and depreciation schedule
• Profitability index

Photo by Greta Hoffman from Pexels