Business planning is the collection of steps necessary for business success.
Your business planning uses your business plan as a reference document. A business plan helps you stay the course. A business plan also increases your chances of getting investment, funding, debts, etc.
Every business executives meeting is a part of business planning as they discuss the business’s current situation and make a plan on how to improve that situation.
Three Types of Business Planning Necessary for Long-term Business Success
Business success is a moving target and your business plan will need to change as the business circumstances change. A business plan will need to change for different goals too.
Hit the moving target of business financial success with these three business planning tools.
Sales Forecasting Plan
The sales forecast gives an estimate of the good and product sales for a certain time and the estimated revenues.
Sales forecasts tend to change with industry trends, changes in the economy, and changes in customer buying preferences.
Cash Flow Analysis Plan
If we can say it in one line, ‘never run out of cash’.
Plan on how you will maintain business cash flow. Having large orders in line is not enough. If you have to spare resources for that project, you may run out of cash by the time you can invoice for that project.
Make a schedule of refreshing cash flow projections and have a contingency plan for any cash shortages with a business financing or debt.
Business Contingency Plan
A business contingency plan is how you’ll handle crises and disasters like fire, flood, or building collapse.
Your contingency plan protects you, your customers, and your employees against a disaster. It will also help you resume operations after a crisis as soon as possible
6 Step Business Planning Process
- Do Research For Your Business Idea
- Develop Business Strategy
- Forecast Financials
- Create a Business Plan
- Revise Business Plan
- Create a Business Plan Presentation
In the following sections, we provide more detail on each key step.
Do Research For Your Business Idea
Your research for verifying your business idea starts with the target market research.
For example, you are planning on starting a florist business. Start with doing a local survey and see how many florist shops are there in your locality.
Check how many new florist shops were opened or closed in the last year. You’ll understand some dynamics of your target market with only this data.
Do you plan to go beyond the block and create a florist shop that will attract customers from every nook and corner of the city? Look into the products your competition offers and work on creating innovation.
You can use market surveys, customer feedback, reviews, industry reports, or any credible source of information available for your industry.
Further, document your research. You can use online tools like Google Docs, Dropbox Paper, Evernote, etc. This research will help you draft your business plan and will serve as the bases of your business strategy.
Pro Tip: Here is step by step guide on how to find the right business idea.
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Develop Business Strategy
What is business strategy? Here is how Harvard Business Review defines it.
“A business strategy is a set of guiding principles that, when communicated and adopted in the organization, generates a desired pattern of decision making”.
A simpler definition of business strategy can be that this is the way you should allocate resources to achieve your business goals.
When developing a business strategy, consider your short-term goals and long-term goals. Your strategy will be different for each.
To separate business strategy from business planning, a strategy is a direction, planning is the collection of steps you will take to move in that direction. Stay the course but you can change how you walk.
Since this is your pre-launch phase, you can look into different business strategies and pick the most suitable one for your business.
Your business financial forecast includes the expected investments or expenses and expected revenues.
The crux of a financial forecast for your business plan is to give a simple, straightforward financial growth plan.
One big hallmark of your business growth is making breakeven. When your business is making a break-even, you have made progress.
Here is how you can calculate breakeven.
Put forecast numbers in your business financial model and prepare an income statement that will help you determine how much funding you’ll need in the first year to survive.
Your projected financial statements give insight into business operations and performance. You can measure business performance for a quarter, a year, or any period you want. You can also see the details of assets and liabilities and business financial position.
Create a Business Plan
You have the knowledge and data to write a business plan. You have also created projected financial statements. Now is the time to draft your business plan.
Start drafting your business plan from business overview to appendix (write an executive summary at the end). You have everything already, now you just have to put the pieces together.
Revise Business Plan
When you have written your business plan, make sure to proofread and revise it for any grammatical or factual errors.
Also, revising a business plan gives you a chance to go over your business idea and its execution once again. You may come up with a new idea or a new way to do something.
If you can, ask someone you trust with business experience to review your business plan. Many times, their insights are valuable and can help you improve your plan.
Create a Business Plan Presentation
Half of the work in securing funding for your business idea is a killer presentation.
Simple ideas stick to our minds. Follow the K.I.S.S principle (K.I.S.S is ‘keep it simple, stupid).
One part of the business plan presentation is the graphics work. If your document or slides are designed by a professional designer, you’ll have a better shot at success.
Use these five tips for improving your business plan presentation.
- Know your audience and their backgrounds and tailor your presentation to that
- Keep your presentation simple, strip it to the most essential details only
- Address weaknesses openly and give your contingency plan for them
- Know and verify numbers
- Research your competitors to show you understand the market
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