How To Develop A Business Plan?

The most important factor in beginning a successful business is careful planning.

Sometimes a business might seem like a good idea before the careful planning stage. It is possible that after some planning, certain problems cannot be solved and the best course of action is to abandon the idea. At that point, all that is lost is some planning time.

A business plan is a basic planning tool. It is a written summary of your proposed business, which includes information about the plans, operations and financial details, its marked opportunities and strategies, as well as the entrepreneur’s personal background.

In depth…

A business plan is a document used to summarize an entrepreneur’s business aspirations, secure legal authority and mobilize resources to launch the business.

When you are developing a business plan, think about the following issues:

1. The product
   • Why would customers buy the product/service?
   • Are the product specifications clear and acceptable?
2.  The market
   • Geographical description of the business location.
   • Is there local demand for the product and if not, how can it be created?
   • Who are the big competitors, how can you counteract them and their influence?
   • How many competitors does the business have? If they are many, your market share is low, which means that aggressive promotion is necessary to ensure visibility.
   • Does your product need publicity and if so, what expenses would that incur?
   • What is the trend in the selling price? Is there any seasonality?
3. Technical factors
   • Have you selected all the necessary equipment? What are your reasons for this selection?
   • If you buy machinery, check if you have a guarantee and if after-sales service is included.
   • Do you know where to source the equipment from? Who is the supplier?
   • Do you have the necessary skills and if not, where can you get them?
4. Infrastructure
   • Is the working/selling space adequate for your business operation to function?
   • Are ownership/tenancy documents for the land/shop/workshop in order?
   • If water is required for your business to operate, is it available close by?
   • Do you have/need a supply of electricity?
   • Is transport of raw materials or finished products a critical factor and if so, how do you plan to handle it while minimising costs?
   • Do you need to register your business? What are the legal requirements?
5. Financial analysis
   • Have you done financial calculations of needed costs, resources, income etc?
   • Have all the costs of production been included in your calculations?
   • Does the business generate enough cash from the beginning so as to meet immediate liabilities (e.g. rent, loan repayment)?
   • Check your cash flow projections. Are they realistic?
   • Check all estimates of capital required as well as running costs.
6. Compliance with human rights and environmental standards
   • Will your business have an impact on the local communities and the environment?
   • How will it contribute to a human rights enhancing economy?
   • In what ways will your business uphold environmental protection?

Your business plan could include the following sections:
A. Table of contents
B. Executive summary
C. Business description
D. Personal background of a business owner
E. Market research, analysis, and plan
F. Organization and management
G. Production plan/operating schedule
H. Risk reduction
I. Financial plan and budget

To develop a business plan, it is necessary to conduct a market analysis, which is explored in Question 6, and a financial analysis.

Financial analysis is required to form a budget of an enterprise. A budget is a calculated estimation of the value or price of the project and is always composed of the expenses – the costs of the project – and the income – the resources brought into the project to cover the expenses.

To start an enterprise, it is necessary to mobilize resources, which requires exploring what resources (including money, staff, training, equipment) are needed, what resource mobilization mechanisms (e.g. writing proposals, holding fundraising events, selling services, etc.) are available, and who can act as resource providers for your business (e.g. banks, micro-credit agencies, government agencies, and charitable organizations).

During the financial analysis, you should investigate as many sources of funding as possible in order to secure the best terms and conditions of repayment. The most important types of start-up funding are owner’s private money, loans (personal or from a lending programme) and grants.