Every entrepreneur wants their business to flourish, and they see it as a money minting churning machine cash from time to time. The young and aspiring business owners often find it difficult to run and manage their new business and thus close it after a few years due to constant losses. They have not put enough thought and consideration while planning for their business before starting it.
One such aspect to consider in great detail is planning the business before starting it, covered through a comprehensive business plan.
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Business Plans and its Components
There are multiple facets of a business plan which is of utmost importance in a new business. The components of an ideal business plan are listed below:
- Executive Summary: This is the starting point of any business plan for any business, and in business parlance, it is sometimes known as an elevator pitch. Every aspect of your business from its vision and mission statement to its goals and values forms a part of this executive summary.
Apart from this, your leadership team, board members, products and services, funding sources etc. are found in the business plan’s executive summary. All the 5 Ws (Who, Why, When, What, Where) are all answered through this executive summary.
- Business Description: The previous description is a broad summary of the business and a macro level highlight, but business description involves everything in detail. The business description gives insights about your company’s story and a brief background about your business’s inception.
The pertinent questions about your business which are answered here are your business model, legal structure, target audience and sales opportunities, headquarter location, the motivation behind starting this business to name a few. Also, how you plan to solve the current problems your potential customers are facing is answered here.
- Market You Will Cater To: The business plan will also entail the territory you will serve and how you will approach your target audience.
- Which market will have the greatest demand for your products and services is answered here.
- What is an ideal buyer persona along with their income levels and how precisely you are aware of the industry you are operating in?
- How are you planning to introduce innovation in your operations to strive to gain the largest market share?
All this can be answered only after you did a thorough analysis of the market by hiring an independent market research firm. This market research is non-negotiable when you start a new business, you can apply for 100% guaranteed loans to get the money for independent market research. It will help you know more about what your competitors are doing currently and how you can do it differently to impact and get more customers.
The market research also gives more and more information about your target market and the potential customers as to what they want from you and how you can serve them efficiently.
- SWOT Analysis: This is a time and tested approach which has been in existence since many decades now and is still relevant today as many consulting giants use it. SWOT is an acronym for strengths, weaknesses, opportunities, and threats widely used for a competitive analysis before entering a new market or starting a new business.
This is both for an internal and external industry based analysis to know several business levers and control. Strengths and weakness are for internal analysis to analyze one’s business while the last two factors of opportunities and threats are external factors used for industry analysis. Many questions about a whole lot of factors can be answered by doing an objective emotions-free SWOT analysis.
- Business Structure: This is usually the foremost consideration before starting a business as it determines the responsibility and distribution of liability. There are several business structures in the likes of sole proprietorship, general partnership, limited liability partnership (LLP), limited company (private limited company, and public limited company) etc.
There are certain advantages and disadvantages of each of these types of business structures, and you need to choose the best based on your initial capital and risk-taking capability. Will you prefer to run the entire business on your own and not share the profit with anyone else or divide the responsibilities and liabilities among all the partners? These are the decisions you need to take in this stage.
- Financial Projections: Finally, it’s time to talk about money, mostly the most important motivation behind starting any business. This stage includes doing financial forecasting of the numbers, for instance: revenue projections for the next 5 years, profit forecast for the next 5 years, the investment needed and return on these investments, taxation aspects etc.
All this is done to get a better understanding of the business’s profitability. You can hire a chartered accountant or a financial analyst to do it for your business, and his fees can be managed by applying for the loans mentioned here.
Description: This blog is for business owners and aspiring entrepreneurs to apprise a business plan and what it entails. Many of them are oblivious of this important aspect that goes in before starting any business.