According to the US Small Business Administration (SBA), nearly 50 percent of new businesses fail within five years. The reasons span from inadequate financing, management skill set and more importantly the absence of a well-researched business plan.
The development of a business plan requires the entrepreneur to answer very important questions about his venture – is there a need for my product or service? Which market segment are my targeting? How is my product or service different from my competitor? What is my competitive advantage? How profitable is the business and what are the cash flows?
A business plan in simple terms serves three purposes;
an action plan
a road map and
a sales tool.
The writing of a successful business plan entails a detailed comprehension and presentation of the certain key elements which I have attempted to summarize below:
- Executive Summary – is the snap shot of the plan. Its purpose is to consolidate the principal points of the document. After reading the summary, your audience should understand the main points you are making and your evidence for those points without having to read every part of your plan in full. If you are seeking financing, the executive summary is also your first opportunity to grab a potential investor’s interest.
- Company Profile – This section should give a brief outline of significant events in the life of the company. It should describe why the company was formed, how it has evolved over time, and the owner’s envision for the future. Here again, the Mission and Vision Statement has to be outlined. The mission statement answers the questions: “Why are we here?” and “Where are we going”. The Vision statement compliments this by answering the questions: “What do we stand for?” and “What type of company do we want to become?”
- Market analysis – The market analysis segment should illustrate your industry and market knowledge. In this section, all research findings and conclusions should be presented. This should also include competitive analysis. You should be able to identify your competition by product line or service and market segment and outline how the competitive threats would be mitigated.
- Marketing & Sales – In the first part of this section, you need to define your strategic position: What do you do for your target market, and what makes you the best? In the second part of this section, you need to outline how you are going to develop and maintain a loyal customer base. Be specific. Include management responsibilities with dates and budgets, and make sure you can track results.
- Management Profile – This section should sell your management team. Every key operational member of the company should have a resume in this section. Investors and lenders prefer to invest in companies with experience in the industry. This section should showcase the relevant experience and skills of the company’s management team.
- Funding Request and Financial Projections: a business plan being a road map and an action tool should entail detail and efficient allocation of resources. However this should be developed after you have analyzed the market and set clear objectives. The plan should outline source of funding the current and immediate future. With regards to the funding request and the financial projections historical and prospective data should be provided.
A key point to writing a successful business plan is determining your target market and why they would want to buy from you. If you are unsure about the answer to this question, revisit the foundation of your business plan. Creating a niche for your business is essential to success. Often, business owners can identify a niche based on their own market knowledge, but it can also be helpful to conduct a market survey with potential customers to uncover untapped needs.
Being clear about what you have to offer is key in writing up a business plan. There is the need for you to ask yourself what you are selling beyond basic products or services. Be sure to understand what makes your business unique. An explicit statement of the benefits and differentiators will help your business stand out from the crowd.
Many Ghana businesses believe that being a jack of all trade is advantageous. It is important to clearly define what you are selling. Simply put, learn to strategize.