Running a business is a complicated and challenging task. It requires one to possess a diverse set of advanced competencies. After all, it is not just about making sure your business earns profits; it is also about paying close attention to its overall performance. There are myriad factors behind a business working together like cogs in a machine. You neglect one cog and you lessen the machine’s efficiency or risk breaking it. For this reason, students studying business are required to write many business plans throughout their studies.
But a business plan is no simple paper. It can be a very demanding project. In fact, even those who study marketing, finance, or leadership and management will likely encounter this paper and find it difficult to complete. So what is a business plan and how is it written? In this post, we discuss what a business plan is and provide an overview of its contents and a quick guide for writing it.
What is a Business Plan
A business plan is a type of paper that presents the plans for launching or managing a business (or company or organization). More specifically, a business plan presents strategies that the business can use in responding to general or particular needs or problems, with the ultimate aim of achieving set goals. In other words, this paper answers the question of what a business must do in order to reach its goals.
In its most basic form, a business plan details what the business is (what it does or offers), where it is headed (the goals set, often in response to a problem), and what it will do to arrive there (strategies). Note, however, that this project can come in any length or degree of complexity. It can be anywhere from a simple plan for a very small startup such as a mom-and-pop store to an advanced plan for a multinational corporation. It can also be either a general plan for a business that is on the drawing board or a collection of strategies for an existing company.
The Purpose of a Business Plan as an Assignment
Students are made to write business plans for a number of reasons. For one, this assignment helps students develop and enhance their competencies in managing a business. All businesses are influenced by internal and external factors. Knowing how to respond to these factors is essential if a business is to survive and thrive. Writing business plans enables students to learn more about business management and hone critical thinking skills. Think of this assignment as a training ground for an actual job or real-life situation.
A business plan also lets students become more familiar with concepts, principles, tools, and models used in business. Managing a business is as much a science as it is an art. While it is true that having a good head for business relies a lot on keen instinct, it also requires capacity to wield an established body of knowledge. A business plan helps students learn how to use this existing body of knowledge to their advantage. For example, part of writing business plans is knowing how to conduct a SWOT analysis.
Before you begin writing a business plan, there are important considerations that you need to look into. These are part of the prewriting process. Accomplishing this will help you avoid getting off on the wrong foot, especially since this assignment takes a lot of time to complete. Some of these considerations are the following:
Know what the assignment is. As stated earlier, business plans vary depending on the instructions. Some business plans are for entirely new businesses; others are existing ones. Read the instructions carefully. Ask yourself: Is this a plan for a new company? Or is this an assignment for an existing company with specific problems?
Understand the situation. Once you have determined if this is for a new company or an old one, determine what the problems or the needs are. Remember that businesses have different areas of concern like marketing, finance, organizational culture, etc. Ask yourself questions like: What are you trying to do? What area of the business has a problem that needs solving?
Know your tools and models. Finally, make sure you have some working knowledge on business tools and models. These tools and models help you make sense of the challenges your business faces. For instance, knowing what a business model canvas can help you greatly when creating a business plan for a new company. Other tools often used are Porter’s Five Forces, marketing mix, SWOT analysis, BCG matrix, and PESTLE analysis.
These considerations just show how complicated this task can be. There are many areas that intersect and interact with one another, and it is your job to untangle them by understanding what is demanded by the instructions. Assuming you have already got these considerations covered, you can proceed to writing the paper itself.
How to Write a Business Plan
Business plans written in schools are basically the same as those produced for actual businesses. The main difference is that those submitted in school tend to be less complicated than those for actual companies. After all, you are just a student practicing for the future while companies have resources that they can use towards completing a very detailed, well thought-out, and highly effective plan.
That said, remember that a business plan is like a research paper in that it requires a lot of digging up for information to be analyzed. So be prepared to conduct a lot of researching and thinking. Since the scope of this assignment varies depending on instructions, for the purposes of this post, we will assume that the assignment requires you to create a new business. Below is quick guide for writing a business plan:
Write the company description. Begin by writing the company description. Think about what your company is and what it does. Describe its history, its size, and its operations. Also include its purpose as well as its mission, vision, and values if applicable.
Describe the organizational structure. Organizational structure refers to the number of people that make up your business, their positions and roles, and their relationship to each other. Think about the personnel or staff in your business as well as what they do. Also think of the chain of command: Who reports to whom? Who is responsible for whom? What departments make up your business?
Describe the products and services. Product refers to tangible items that your customers purchase (e.g., food or clothing) while service refers to intangible value that your customers receive through your skill, knowledge, or expertise (e.g., a full-body massage or a haircut). Describe your products or services and explain how they meet your customers’ needs or bring value to their life.
Conduct market analysis. Describe your market. For instance, are you in the food industry or the luxury industry? Who are your customers? Try to be as specific as possible, such as by detailing the demographics of your chosen market. Note that it is essential for you to have some knowledge in market segmentation to know which customers are your targets. Apart from identifying your market, also present details on the market competition. Who are your competitors and how tight is the competition?
Present your goals and objectives. Your goals and objectives are the milestones you want to reach. They represent what you want to achieve and where you envision your company will be after you implement your strategies. When writing your goals and objectives, make sure they are SMART: specific, measurable, attainable, relevant, and time-bound. For example, your goal is to reach 5,000 customers in three months or grow your revenue by 50% in one year.
Present your strategies. At this point, you have already described your company and its offerings, identified your market, and laid out what you want to achieve. Now is the time to present your strategies, which refer to the measures and actions you will take to achieve your goals. When coming up with strategies, make sure that they align with your goals. For example, if one of your goals is to capture more customers, then your strategy should focus on marketing such as creating a brand image or launching promotions.
Present your timeline and resources. Your business plan should be time-bound, which means it has to follow a specific schedule. Identify the various stages of setting up your business. Then identify the time period each covers and what resources will go into accomplishing them. Information on the timeline and resources can be presented as a graph or a table.
Describe your evaluation process. Evaluation refers to the process of determining if your strategies worked and if you were able to achieve your goals and objectives. When discussing your evaluation process, make sure that you are looking into the right measures. For example, if your goal is to expand your customer base, then you should be looking at the numbers of customers. On the other hand, if you are evaluating revenue growth, then you should be looking at profits.
Write the executive summary. The executive summary refers to the summary of your business plan. You should write this last, after your entire plan has been completed. This document is usually 150 to 250 words long. While it obviously will not be able to present the details of your business plan, it should be able to provide the general idea.
Writing a business plan is a long and complicated process. Remember that this is not just about writing what comes to mind. A good paper should be supported by a lot of evidence from reliable sources, present logical strategies, and be realistic in its scope. The steps provided above serves as a broad guide for writing this paper. In the end, it is vital for you to still examine the instructions from your professor and know what goes into your paper.
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