1. What is a business plan?
Answer: A business plan is a detailed document outlining the goals of a business, the strategy to achieve them, and the structure of the business. Generally, it comprises details about the company’s mission, market analysis, financial projections, and operational plans.
2. Why is a business plan important?
Answer: A business plan is actually a roadmap that guides the business with the owners and managers keeping to their objectives. It is one of the factors that will serve as a major requirement for investments from investors and lenders. For decision-making, strategic planning purposes, it determines the potential risk and challenges encountered before they materialize.
3. What is the main contents of a business plan?
Answer: A thorough business plan involves the following details:
Executive Summary
Company Description
Market Research and Analysis
Organizational Structure
Products or Services Offered
Marketing and Sales Strategy
Funding Request (if applicable)
Financial Projections
Appendix (if necessary)
4. How long should a business plan be?
Answer: The length of a business plan depends upon the complexity of business. Generally, it ranges from 20 to 40 pages. Executive summary should be short of 1-2 pages, and the rest of the text must provide comprehensive detail.
5. How do I do market research for my business plan?
Market research is the process of gathering data about your target market, competitors, and industry trends. You can conduct surveys, interviews, and focus groups with potential customers; analyze competitor businesses; and gather secondary data from industry reports, government statistics, and online resources.
6. What financial projections should I include in my business plan?
Answer: Financial projections will help show the potential profitability and sustainability of your business. Key projections to include are:
Profit and Loss Statement (Income Statement)
Cash Flow Statement
Balance Sheet
Break-even Analysis These should cover a minimum of 3-5 years and provide realistic estimates of revenue, expenses, and profits.
7. What is an executive summary, and how do I write it?
Answer: Executive summary: A summary of the whole business plan. The executive summary highlights the most important elements in a business idea, mission, target market, financial projections, and funding requirements. It should be brief, clear, and engaging. Although it is the first item in a business plan, it is usually written last in order to effectively summarize the business plan.
8. Do I need to have a mission statement?
Answer: Yes, a mission statement is part of a business plan. It defines the purpose of the business, its core values, and its overall goals. It aligns the team and informs investors about the company’s vision.
9. What is the difference between a business plan and a business model?
Answer: A business model defines how a business creates, delivers, and captures value in the marketplace, meaning essentially how the business makes money. A business plan is a wider document that contains the strategy of the business, goals, and financial outlook. The business model is usually contained in the business plan.
10. How frequently should I update my business plan?
Answer: It’s always a good idea to update and refer back to a business plan when there are huge changes to the business environment, industry trend, or perhaps organizational goals. An annual review is a good rule of thumb; however, adjustments often may have to be made more frequently if the strategy or operations change radically.