Business Planning Process
A business is an activity or entity, normally engaged in the provision of products and or services, for commercial gain, extending to non-Commercial organizations that may or may not be profit oriented. This is irrespective of the size and autonomy. With this definition, nongovernmental organizations, private, public service sector like schools and hospitals are regarded as 'businesses‟. Meanwhile, a plan is a statement of calculated intention to organize effort and resource to achieve an outcome. This may or may not be in written form, but essentially comprising explanations, justifications and relevant numerical and financial statistical data.
Business can be classified into the following groups but not limited to: a small company; a large company; a corner shop; a local business; a regional business; a multi-million naira business, multi-national corporation; a charity organization, a Federal, State or Local Government Ministry, Agency or Department, an hospital, a joint-venture; a project within a business or department; a business unit, division, or department within another bigger organization or company, a profit center or cost center within an organization or venture, an individual or joint ventures, etc.
Business plan therefore could be referred to as the activities and aims of any entity, individual, group or organization with the purpose of converting efforts to results. It is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.
Business plans may also target changes in perception and branding by the customer, client, taxpayer or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their returns within that timeframe. Invariably, the business plan simply serves as the detailed map of the venture that will guarantee a steady start up, a steady but gradual growth and vitality of the business.
The process of determining all the goals, strategies and projected actions that you intend taking to promote and ensure the survival and progress of your business within a given time frame is referred to as business planning process. This characteristically has two key aspects, one focused on making profits and the other focused on dealing with risks that might negatively impact the business. Business plan serves as a blueprint to guide the organization‟s policies and strategies which are continually modified as conditions change and new opportunities or threats appear. If this is prepared for external audience like lenders and prospective investors; it has to include details of the past, the present, and a forecast performance of the business. Typically, this also contains pro-forma balance sheet, income and cash flow statements to show how the required fund shall positively affect the financial position of the business.
Business Planning Process:
When writing a business plan from the scratch, from a template or from the guide of an experienced business plan consultant, there are five required steps to create a new business plan. It is a detailed process here referred to as business planning process. These steps are:
RESEARCH: Business planning process starts with a detailed research into the industry, its customers, competitors, and costs of the business. This research comes in various forms like information from articles, collected data or direct interviews with prospective clients, experienced consultants or entrepreneurs. The result of the research should be meticulously organized and properly documented with its source.
STRATEGICS: The second step is to strategics based on the information gathered from the research. A good major source of strategics is to watch the current practices in that business environment to have a foundation to build the necessary competitive distinctiveness. One needs to ponder over the strategy meticulously to consider the appropriate location, start up finances, equipment, operations, marketing and legal formalities.
CALCULATE: From the decided strategy activities, comes the third step to calculate. It is essential to calculate and have a rough draft of the financial implications in terms of the expected expenditure and revenues to ascertain a possible profitability at the end of the day. There is the need to bring up all assumptions for start-up expenses up to maturity at calculations for running early operations. Most start-up businesses pack up before gestation stage due to financial assumptions.
DRAFT: The fourth step of a business planning process is to begin to draft and flesh up the background work made in the decided strategy and the financial calculations for the actual business plan detailed content. One may require the services of a business plan writer or
consultant, if there is any challenge in respect of this.
RE VISITATION AND PROOF-READING TO FINALIZE: The fifth step is to revisit the entire business plan details and reconsider any ambiguity or inappropriate wordings and ideas featuring in the plan. There may be the need to give it further fresh looks after setting it aside for some time. Soliciting for the assistance of an experienced proof-reader may be necessary to prevent grammatical, spelling and formatting errors to finalize the plan.
Typical Structure for a Business Plan for a Start - Up Venture
From the foregoing, one will agree that business plans are decision-making tools. There is no fixed content for a business plan. Rather the content and format of the business plan is determined by the goals and audience of that enterprise. Some entrepreneurs simply see a business plan representing all aspects of business planning process that include only the vision and strategy with sub-plans to cover marketing, finance, operations, human resources as well as a legal plan when required. To some others, it has to be more detailed than that. It has to typically include an introduction/overview, a short description of the business idea and opportunity, what makes it different, who will be involved in the business, how you will provide your product or service, your marketing and sales strategy and financial situations and forecasts for the expected profitability. Consequently, it is essential to know that the structure of business plans varies. However, this discussion uses a typical structure for a business plan for a start-up venture.
