I found this article talking about simple steps in creating a business plan. The steps are general in perspective but interesting. So here goes, an addition to your knowledge bank.
Your business plan is like a road map to long-term success. Have you ever been in a situation where you didn’t have a map to find your destination and got lost wasting precious time and money? Well, the same can happen to your business if you don’t plan out your business strategies.
Why you need a business plan.
It gives you a clear direction where your business is heading. Many business owners just jump into creating a business without researching and making a concrete plan. Inevitably, they soon find that they are out of money and have no time or clear strategies how to market their business.
Here are 8 simple steps to creating your own business plan (this is by no means a comprehensive plan but a primer to get you started):
1. Name of your business – create a name or reevaluate the name of your business. Does it integrate well with what you are selling? Is it easy to spell and remember? Is it a name that can be well branded over time?
2. Vision – what will your business look like 5 years from now? Think of how you may want to expand it to include other branches or extra employees.
3. Mission statement – this defines what your business really does, what activities it performs and what is unique about it that stands out from your competitors.
4. Goals and objectives – clearly define what you want to achieve with your business. Make sure they are quantifiable and set to specific time lines. Set specific goals for each of your products or services.
5. Strengths, weaknesses, opportunities, threats (SWOT) – by analyzing these characteristics in your business, you will get a clearer idea of what it will take for you to not only to survive but also prosper.
This could include such factors as:
– your companies own changing industry
– the marketplace which may change due to social and economic conditions.
– competition which may create new threats and/or opportunities.
– new technologies which may cause you to change products or the process in how you do things.
Evaluating your SWOT will help you to:
– build on your strengths
– resolve your weaknesses
– exploit opportunities
– avoid threats
Doing this analysis will help you create a more realistic strategic action plan.
6. Strategic action plan – this is the most critical step of your business plan, because without it, your business will not get off the ground. This should include your sales and marketing strategies.
7. Financial plan – a business can operate without budgets, but it is clearly good business practice to include it. With budgets, you will be more likely to achieve your business objectives, you will make more-reasoned decisions and you will have better control of your cash flow.
For any period, a cash flow statement would include:
– The cash and credit sales (or accounts receivable) expected to be received during the period.
– The anticipated cash payments (for example, expenses for purchases, salaries, utility charges, taxes, office expenses etc.)
– A description of other incoming and outgoing cash, with a calculation of the overall cash balance.
This will assess how much money is on hand to meet your financial obligations – what cash has been received and what has been paid out. Knowledge of this cash flow cycle will help you predict when you will receive funds and when you will be required to make a payment.
8. Measuring and evaluation – you wrote your business plan and set the goals with the intent of achieving them. So now break them down into measurable pieces and monitor the results regularly. A plan that cannot be measured is almost always destined for failure. Celebrate your wins and recharge yourself to accomplish your next goal.
Decide beforehand what constitutes a real serious loss and what loss will be acceptable.
If you find your goals are unrealistic and unattainable, adjust them, but realize that it takes hard work to achieve them, so don’t give up easily.
Conclusion: Now that you have a business plan, make it a part of you by knowing and understanding it clearly. Build upon it continuously and refer to it often, so you remain on track to building a profitable business.