In plain and simple terms, whether you are starting a new business, expanding an existing one, considering major changes to your business, need financing from the bank or a partner, needing to get everyone on the same page — or any combinations of the above — you need to have a written business plan.
Yes, I said it, a written business plan. I know your grandfather was successful with the farm and probably didn’t have a written business plan, but believe me, we are not living in your grandfather’s time. We are living in a world that is changing rapidly, where the only thing that remains constant is change. The world is characterized by fierce competition and extremely low tolerance for errors, and you can be punished severely for not looking before you leap. In the current business environment, there is only a thin line between being profitable and unprofitable.
Get It In Writing
In the world as we live in now, not having a written business plan is akin to sailing a ship at night without a compass or a rudder. Would you really want to do this? A written business plan forces you to separate the emotions from the expenses; it assists you in navigating the waters by evaluating whether your product or service will indeed satisfy a need. A written business plan also makes it easier to communicate your ideas to others, as it provides a clear guideline of what you expect and exactly how you will operate your business.
So now that I have your attention, let me outline the essential components of a business plan and tell you how to begin writing one.
Understand What’s Required
What is a business plan? A plan is any scheme, program, or method worked out beforehand for accomplishing one or more objectives or goals. A business plan is defined as a document that summarizes how a business owner/manager/entrepreneur will organize a set of resources and implement activities for the venture to succeed.
In other words, a business plan outlines how to achieve business objectives. It provides a road map and a timeline showing where you are, where you want to be within a given time period, and how you intend to get from point A to point B. Therefore, you should be directly involved in the process of establishing goals, assessing resources, determining what is needed, and creating a strategic action plan.
Business Plan Components
At this stage, you may be asking if there is a standard format for a business plan and how much detail should be included in the plan. Let me begin by answering the latter part first. The amount of detail in a business plan will vary depending on the purpose of the plan. A plan may be simple, comprising less than 10 pages. Most experts believe that, as a rule of thumb, if the plan requires outside resources (loans or equity investment), then it will need to be between 25 and 50 pages.
To answer the first part of the question, there isn’t a standard format for a business plan, but most plans include the following six main components:
1. Executive Summary: Although this appears first in a business plan, it is usually written last. It contains a brief description of the vision, mission, and goals of the business, and summarizes key elements of the business plan, such as strategies, sales growth, and profitability.
2. Description Of The Company: This covers all aspects of the business, such as name, location, and history (including a summary of past performance for an existing company or start-up plan for a new company).
3. Marketing Plan: This piece identifies the targeted customers; describes the products or services being offered; examines the competition, pricing strategies, and advertising; predicts sales forecasts; and explains how the product will be distributed and packaged.
4. Operational Plan: This includes a detailed description of how products or services will be produced. Specifically, it focuses on the production system(s) to be used; physical resources that are available or will need to be acquired (purchased or leased); the size and capacity of the business; and regulations/policies governing product production, such as special permits, zoning, and licensing.
5. Human Resource Plan: This describes the organizational structure of the business (identifies who will manage the business and the number and type of employees needed, and provides information on compensation and benefits).
6. Financial Plan: This includes the funding requirements and provides detailed information on break-even analysis, projected income statements, cash flow, balance sheets, and a discussion of selected financial indicators.
While a business plan is not a guarantee that your business will be successful, studies have shown that the chances of your business failing to get off the ground is 10 times greater when you don’t have a plan, and start-ups with a business plan raised twice as much capital as those without one. Other studies have shown that having a good business plan is the single most important factor for success in a globally competitive market. Make sure your operation has a map to get you where you want to go.
(Source – http://www.growingproduce.com/farm-management/build-a-better-business-plan-for-your-farm/)