Business Plan

The first step for getting into business is market research. The product or service must be unique and must answer a need. It can even be what is already available in the market but it must be different. It must be better or superior.

The next step is to have to a roadmap to ensure the success and viability of the business. The roadmap is in the form of a business plan. The business plan is the roadmap, to reach the destination to success of the business.

Every business involves capital, growth and risk. Whether small or large, a person or group getting into business must know what it involves in financial terms. One cannot simply plunge into a business hoping for better or worse. We need to have a solid business plan. We need to implement it to achieve success. Having a written up business plan at the outset, gives the entrepreneur a sense of direction and commitment. By having a business plan at the outset, it can very well be a formula for future success.

A business plan helps us to give shape to our business project on paper and also state it in clear financial terms. The business plan states the stages and inputs of the business. In financial terms, we can ascertain the return on capital employed and also it is important to work out the breakeven point. What should we have in our business plan? What are the elements of a business plan?

A business plan has three main elements. Initially the first element is getting the business organized, second element is purchasing or production and the third element is sales. These elements really devolve from the two core arms of the trading business, buy and sell. A manufacturing business needs to buy raw materials, develop or produce the product, and advertise and sell its products. A service business needs to develop the service capability, advertise, sell and provide its services.

Firstly you need to get the business organized. Select an appropriate name for your business. Print elegant business cards with an appropriate vision or slogan for your business. Your business card can be a silent ambassador for your business. Find a place from where to do your business. Open bank accounts for the business and apply for loans if needed. Provide all the facilities for the business. The time required for setting up the business until the products or services actually roll out is called the gestation period. You must be aware of what the gestation period for your business will be.

Secondly, as the business is getting organized one has decide on reliable and economical sources of supply for the business. Depending on demand and sales, the inventories have to be maintained. Maintaining inventories is costly, so inventories must be minimised and relevant.

Thirdly, the most important part the sales must be booked. Initially a lot of cold calling and some minimum advertising will be necessary. Once the customers are convinced about your product or service repeat orders will become a normal feature for the business. To really ramp up the sales, besides cold calls and follow-ups, one may have to attend trade shows and write sales letters. Draw up a list of prospects and regularly revise the list.

Inevitably, if one is applying for a bank loan, a project report has to be submitted to the bank together with the loan application. The project report is a combination of three aspects. The personal profile of the promoters and directors of the business, the project or business description and a financial plan for repaying the loan.

The introduction to the project report highlights the capabilities of the promoters and directors of the business. It lists the qualifications and experience for the proposed business. It also lists any previous business associations and also any documents by way of proof are attached. The introduction concludes with the brief description of the present business proposal and attached supporting documents like appointment letters and vital correspondence.

Introduction is followed by the project description. It outlines the location of the project and quantities involved in the project.

Project description is followed by a brief description of the investment involved, the operation period and the revenue expected.

After investment required, the sources of finance for the investment is outlined. After working out the total cost of the investment, the owner's capital and borrowing required is specified.

Then the estimated operational or running expenditure per year on various expense items is listed.

Next the calculation of profitability and cash liquidity is given. Then finally the project report lists the repayment schedule of the loan. The repayment period would usually be three to five years.

Thus the project report, in other words, is also a business plan. In order to get a clear picture, the facts and figures adopted in the business plan must be as accurate as possible. Subsequently as the business starts functioning, a budget is also important to track the progress of the business plan and comparison with the actual figures of performance.