Let me share part of my book of business plan. Enjoy.
HOW TO WRITE A VIABLE BUSINESS PLAN
By Olayinka Gabriel Motunrayo Msc ACA
What is a business plan and why is it important?
A business plan is a roadmap for your business. It is a written document that describes your business, explains where you are going and how you will get there. It explains the problem you are trying to solve and the product or service you are offering. It explains who are you targeting, your strategy and your financial forecasts. It may also include background about your company structure and the people in your organisation.
Though business plans can vary enormously in length, style and content, they all need to be clear, practical and realistic.
Why prepare a business plan?
You may have heard the old cliché: failing to plan is planning to fail. This is true when it comes to your business. Entrepreneurs are often people of action. You might want to get going with product development, selling and running your business but remember, it’s worth the extra effort to take some time in the early stages of a business to think through exactly what you want to achieve and how you want to achieve it.
A business plan is critical. It will help you structure your ideas, understand whether your idea is feasible and set goals. Of course a business plan is essential if you need to make the case for your business to outsiders, including potential clients, investors, the bank, and possibly even future employees.
A business plan will help in the following ways:
1. Apply for finance from a financial institution;
2. Secure investors, sponsors, suppliers and staff;
3. Clearly outline your goals and long-term vision;
4. Determine the commercial viability of your idea;
5. Examine your business idea from many different angles;
6. Test your commitment and motivation;
7. Identify your business's strengths, weaknesses, opportunities and threats;
8. Develop strategies to successfully operate and market your business; and
9. Establish measures to evaluate your business success.
Who should prepare a business plan?
Every entrepreneur or business owner, whether you have an idea, or a mature business should prepare a business plan. A business without a business plan is like a building without an architectural design. Think about why you want to write a business plan? Why are you reading this book? Who will be reading your business plan? Are you mainly writing for yourself and your team? Or do you need to convince outsiders too? Either way, the plan will need to be clear, simple, logical and realistic.
Limitations of a business plan
It is important to note that a great business plan doesn’t necessarily mean you have a great business!
A business plan is just a tool to help you understand and test your idea, set goals and structure for your team, and explain what you are doing to outsiders. But it is still just a plan! For example, the first business venture I got involved with, I spent months and months revising and updating and finessing the business plan, when I should have been out selling and learning what my customers really wanted.
The business plan should be a live document, which is should be constantly updated, based on what you learn about your customers, your market and your business model. See it as a set of assumptions and ideas that should be tested as you go. Therefore write your plan, but keep testing it as you go and if it doesn’t work; change it!
What makes a great business plan?
It is Important to know why you are writing the plan and for who.
A business plan template attached to this book illustrate the different components that should go into the plan and, some of the stylistic issues that can help you set your plan apart from the others that could be stacked on the desk of your banker, investor or other potential stakeholders.
Below are some of the things that make a great business plan
1. Short, clear, concise writing.
2. Well-placed graphics, images and good design can really lift your business plan and make it professional.
3. Include a cover page and a contents page
4. Ensure the pages are numbered
5. Keep your sentences short – no more than 15 words per sentence.
6.Try reading it aloud. If you have to pause for breath, break the sentence and start another one.
7. Provide signposts for the reader.
8. At the beginning of each section, tell them what you are going to tell them and at the end of each section, tell them what you just told them.
Why is it important to know who you are writing for and why?
Each business plan is different. The length and style will depend on your industry, the stage of your business, and the audience you are writing for.
Take a moment to think about why you are writing this plan, and who will be reading it? Does it need to be polished and professional for the bank? Will a clear set of bullet point plan, diagrams and images be enough to inspire, direct and motivate your team?
This book uses a standard business plan template to help you break down your plan into key sections. It covers the main components of a business plan that will help you understand if your idea is feasible, and that investors or other outside stakeholders would expect to see. Remember the template is just a guideline - you should always do your own research to ensure you have covered all the critical topics relevant to the industry you are in, and the growth phase of your company. Over 50 business plan is in the CD to guide you.
Components of a business plan template
1. Executive summary- the overview that will give the reader a snapshot of everything that is in your plan, and hopefully, get them excited about your business!
2. Production Plan (Problem and solution section)- This is the most important part of the business plan, and where many entrepreneurs fail.
Every great business starts with a pain point, a problem that the entrepreneur is trying to solve for its customers. The next thing is the explanation of the solution to the problem – this is your product or service in a nutshell. What are you offering to the market, and how will it solve a problem for your customers you need to explain your value proposition, what is the unique value you are providing to your customers
3. Market section- this section will explain who you are trying to serve, the size of the market and the different segments you are targeting.
4. Competition- In this section you will look at what and why you can do better than the competition.
What is your’ secret sauce’– that thing that you have that you know your competition doesn’t have.
5. Strategy- The focus of the strategic aspect of the business plan focus on how will you reach your market with your unique value proposition? How will you make money?, In this section, you will describe your business model, your strategy – including your operating, product and marketing plans
6. Financial Plan - If you are writing the plan for an investor of lender, this is where you will explain how much money you need, and what kind of return you will provide.
WRITING A PUNCHY EXECUTIVE SUMMARY
The executive summary is the overview of your business plan. Like the title suggests - it’s a summary, so it should be short. It’s also most important section of the business plan – because it’s often the only part people will read. If you’re writing your business plan for outsiders, the executive summary is like your elevator pitch – you’ve got about 30 seconds to capture your reader’s imagination, before they toss your plan onto the ‘no’ pile and move onto the next plan. As much as it is a summary, it’s also a pitch; and the point of a pitch is to sell. You don’t need to squeeze every part of your plan into the executive summary.
You need to highlight the most compelling parts, and inspire your reader to learn more.
The idea is to start with a compelling sentence or two that sums up your unique solution to a big problem that should be direct and specific. If you are going to name drop – now is the time!
An executive summary is like abstract when writing a project, the abstract capture the summary of the entire project. The executive summary should capture the entire project but in a summary form.
Each of the points mentions above under the Components of a business plan template will need to be summarized it should take just one or two sentences. So your total executive summary should not be longer than 2-3 pages. If you think that can’t be done, take a look at the sample executive summary in any of the 50 Business plan in the attached CD.
Problem: What is the problem you are trying to solve? Describe it in one or two sentences, with numbers to back up your statement.
Solution: Describe your solution briefly. Explain what you are offering and to who. Don’t use technical jargon. Explain briefly your unique value proposition.
4) Market: Summarized How big is the market? Is it growing? What is driving that growth? And Which segments will you be targeting?
5) Competition: Provide an overview of the competitive landscape. Who else is operating in the space?
Why are you different? What is your unfair advantage?
9) The financial plan: - Provide a snapshot of your financials.
How much revenue do you expect to generate within 5 years? When do you expect to break even?
If you are seeking outside capital, you will need to show either that you have the ability to pay back a loan (plus interest), or if you are seeking equity investment, you need to show convincingly that you can grow to a point where you can provide a return to your investors.
The second part of the business plan after the executive summary is the Production plan it is referred to as Value proposition
What is a value proposition?
It is the thing about your product or service that will create unique value for the user. It is where your product or service intersects with what your customer needs or want. It is the magic point where product meets market, right at the heart of the business model.
To help you figure out and articulate your value proposition, It is a really useful way of explaining what your product does, and how it delights your customers. Begin on the right with the product side of the canvas. Start by listing the features of your product or service.
A feature is a factual description of how your product works. If you’re selling a car, the features would include air conditioning, or electric windows.
Next step is to list the benefits- a benefit is what your product or service does for the customer.
How does it make the customer’s life easier?
How does it make the customer happy, or help him or her solve a platform?
The benefits of what am doing include high-quality affordable learning, anytime, anywhere. What about your business?
What is the benefit you provide for customers? Describe the product experience: This describes how your product or service makes customers feel. What experience are you trying to create? How do customers feel when they use your product or service?
Under your value proposition move on to the customer side, there are several sections.
Start with the customers’ wants.
What are the emotional drivers behind how your customers make decisions?
What do they want to be, do or have? These are often aspirational. What are your customers dreaming of?
For me we believe our customers want success – whether that’s career advancement, or business growth, they want to progress, and achieve.
Think about what your customer wants and write them down.
The Next thing is, look at customer needs- these are the more rational things that the customer needs to get done.
For my own customers this is about skills, knowledge, a certificate and networks.
Thirdly thing you can look at is the customers’ fears. This might seem a bit strange, but it’s about identifying the darker side of decision making, that is sometimes hidden but can be very powerful.
What does your customer fear?
For example for me our customers could be scared of missing out on opportunities, worried they don’t have the skills to succeed, fearful that they will get left behind on the career ladder.
What fears are your customers facing, that you need to understand, and that might help you position your product?
Lastly under the value proposition is the substitutes i.e. how are your customers currently solving the problem they face.
They might not always be good substitutes, but there will always be something and to be compelling and generate revenue, your value proposition needs to be significantly better than these substitutes.
For my customers, substitutes might include reading the business pages of the paper or quickly Googling a term I don’t understand when it comes up in a business meeting. These are poor substitutes, but they are ‘band-aid’ solutions for people without access to quality, affordable management education, available anytime, anywhere.
Having come up with your value proposition canvas, now it’s time to turn the words on the tool into a sentence that summarises your value proposition.
My value proposition is as follows: We empower African managers and entrepreneurs with practical and accessible learning and development tools that help them advance their careers and build their business.
MARKETING PLAN SECTION: This section will explain who you are trying to serve, the size of the market and the different segments you are targeting.
Market Size: Your make size is the total population of the market, who and who need your product or service
TARGET MARKET/MARKET SEGMENTATION
Out of the total population of the market, who and who are you targeting with your product or service. Can you categorize them into segment?
TAKE A LOOK AT A SAMPLE OF A MARKETING PLAN FOR FISHERY BUSINESS
Market Analysis Summary
Strong demand for catfish is working in the industry's favour.
Nigeria fish consumption is estimated to be 2.66 million metric tons of fish every year, while the local production is estimated to be just about 1.33 million metric tons the remaining 50% deficit is imported annually.
Nigeria is one of the world’s largest importers of fish. Nigeria spends over N97 billion on fish importation every year. This shows that the market for fish in Nigeria is huge and with the population growing at 5.7% annually, the market will continue on the upward trend.
It is obvious the opportunity here is huge and the market share is very promising.
With a population of over one hundred and forty million (140,000,000) people according to 2006 national population census figure and an estimated national population growth rate of 5.7% per annum , average economic growth rate of 3.5% per annum in the past five (5) years ,Nigeria is a large, expanding for a sustainable market for catfish.
IBISU Fish FARM has targeted three main customer groups to sell their catfish to. The first group is wholesale distributors. This segment has a 100% growth rate with more than 50 potential distributors. The second segment is Catfish Processing Companies - this segment is growing at 65% and there currently are 7 potential customers. The third group is hotels, restaurants and drinking joints. This segment is growing at 100%.
Target Market Segment
The company is primarily targeting fish farmers, individual, the wholesale distributors, catfish processing companies, hotels, beer parlour/joints and restaurants. We focus on business to business so that we can sell in bulk to them and they further sell to the final consumers. The commercial demands for catfishes are at an all-time high and will continue to increase for years to come. It is important to realize that we have a very unique and much-needed product.
The Company has chosen its target markets because catfish is in high demand. Sales are price-sensitive, so that proximity to markets provides a competitive edge. IBISU Fish FARM identified an opportunity to take advantage of.
The primary market can be broken down as follows.
This segment has a 100% growth rate with more than 50 potential distributors. This segment is our primary target because they contribute 63% of the sales. We have designed a unique marketing strategy to reach out this segment.
CatFish Processing Companies:
In this segment, there are currently 7 potential customers and this segment is growing at 65%. These companies buy from us and process it to dry fish in order to sell with Nigerian market or export it for international market.
Hotels, Restaurants and Drinking Joints:
This segment has well over 100 customers and is growing at 100%. We are targeting this segment because customers in this segment need catfish on daily basis to serve their numerous customers.
All information is based on industry research.
Competition- In this section you will look at what and why you can do better than the competition.
What is your’ secret sauce’– that thing that you have that you know your competition doesn’t have
TAKE A LOOK AT A SAMPLE OF A COMPETITIVE PLAN FOR FISHERY BUSINESS
Competition and Buying Patterns
There has been a strong demand (sellers' market) for our products for several years. Traditional buying patterns in this industry are based on quality, price, reputation of the producer, delivery times and proximity to markets. During such a sellers' market, buying patterns are often more influenced by availability.
The buying patterns of the different customers are typically based on these variables:
• Ability to deliver consistently on long-term contracts
Currently in Jalingo, there are no serious competitors. But the demand for quality catfish is so high and the market shows no sign of going down.
Some of the competitors are:
1) Best Nayus Global Farm in Sabongari Area of Taraba State
2) Jehu Fish farm
3) Oyigebe, Oyigebe fish
4) Suitai Farm
5) Malum Fish Farm
These competitors are all located in and around Jalingo city and we believe their presences will not affect our farm because none of them is involve in fingerlings production rather potential fish farmers go far to source for good seed
IBISU Fish FARM' competitive edge rests with its proximity to its target markets, as well as the industry knowledge, reputation and contacts of its senior management. Their many years of direct experience have led them to identify this unique opportunity and put together the technology and sources to take advantage of it. The reputation in the specific market segment will result in the achievement of long-term commitments for our production
Competitive Strategy: In analysis your competitors, it is important to look at your competitive strategy. Every firm competing in an industry has a competitive strategy, whether explicit or implicit. This strategy may have been developed explicitly through planning process or it may have evolved implicitly through the activities of the various functional department of the firm.
Some of the formal competitive strategy are (i) Micheal Potter five force model (ii) SWOT analysis (iii) Boston Consulting theory (iv) PESTEL Analysis. Details about these strategies are beyond the scope of this book. You can get a copy of my book title Developing Entrepreneurship Skills (A practical approach). You can obtain a free electronic copy of the book. Send a mail to firstname.lastname@example.org.
Strategic Plan- The focus of the strategic aspect of the business plan focus on how will you reach your market with your unique value proposition? Your unique tactic in penetrating the market, how will you make money? In this section, you will describe your business model, your strategy – including your operating, product and marketing strategy.
The business model: You will need to explain your business model. How will you make money? Are you targeting companies or individual consumers? How will you find and reach your customers? How will you scale?
Team: - Explain why your team is best placed to win. Where does each person on the core management team fit in? Have you covered all the key roles and skills? Be specific – if you have a great idea for a mobile advertising business, and your chief marketing officer was previously head of advertising At a smaller scale, if someone on your team has great relationships and connections in the community where you operate, then say so.
Marketing Strategy: One other important strategy is the Marketing strategy. In your marketing plan you must have explain who you are trying to serve, the size of the market and the different segments you are targeting. Under strategy you need to tell us how you want to reach the market. What unique strategy do you have in reaching you target market
The Financial plan
You will need to provide a financial forecast. If you are writing the plan for an investor of lender, this is where you will explain how much money you need, and what kind of return you will provide.
What are your key costs?
Your Variable cost and your Fixed Cost
Example of Variable Cost are Material, Labour and Overhead
Fixed cost including your Property Plant and Equipment
You will need to prepare a financial statement particularly three statements 1.Income Statement, 2. Balance sheet (Statement of financial Position) and 3. Cashflow. If you as just starting the business, your financial statement is forecast statement. A forest is a projection of what you are expecting.
How much revenue do you expect to generate within 5 years? When do you expect to break even? If you are seeking outside capital, you will need to show either that you have the ability to pay back a loan (plus interest), or if you are seeking equity investment, you need to show convincingly that you can grow to a point where you can provide a return to your investors.
If you are asking for capital, spell out how much you need, what you will spend it on, and when you will be able to deliver a return.
Inside the CD attached to this book is an Excel Template that can help you prepare the financial statement.
Making it real
By now, you should have all the elements of a solid plan.
You should have all the ingredients for a great and punchy pitch. Have a clear problem and solution. Have a good understanding of the market you are trying to serve, be able to explain your value proposition and why it is better than the competition, and you should have your whole business model, have a solid plan for executing on that plan through operations, marketing and people and have a set of numbers that tell your financial story.
Your business plan is important- it should have helped you understand whether you have a viable model as well as clarify what business you are in, what problem you are solving, who you are trying to reach and your strategy for making money.
But a plan is just a plan, you will need get out there and see if that plan works!
Turn your business plan into a live document. Keep testing it, revising and updating it.
What are the assumptions that are underlying your plan?
A great way to turn your business into a living document is to list out these assumptions, write them on the wall of your office, or wherever your work and regularly come back to them to see if the assumptions are actually true. Have a go at writing your assumptions, and commit to testing them regularly. See if you can have a go at figuring out how you will test them – what metric will you measure? How will you know if it’s working?
Now that you’ve completed the book, you will need to pull together all the elements you have read in the book so far into the business plan template. You should already have completed all the key sections, so just copy and paste them into the template, and read it through to check that it all hangs together and makes sense.
Remember, your plan should read like a story of your business. An outside person should be able to pick it up, read it, and understand what you do. They should feel excited after reading the plan, not bored and they should be able to read it quickly – your plan should not be more than 20 pages; 10 pages is fine.
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