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Business Plan: Definition, Benefits, and How to Make it Before Building a Business

A business plan is one way to make your company successful. Before building a business, you need to know about that, because prospective entrepreneurs are advised to design a business concept to be built first. Without careful business planning, you will not see the direction and purpose of a business that you are living in.

The success of an entrepreneur is closely related to his successful ideas. Without proper preparation, this may cause an entrepreneur to fail in running his business. To reduce the risk of failure, it would be nice to prepare a business plan carefully in advance.

What is a Business Plan?

A business plan is a guide or document for your enterprise that outlines goals and details how you purpose to achieve those goals. In the paper, there is financial analysis, capital and income estimates, and marketing and sales strategies while running the business. 

In addition, the business plan also includes short, medium, and long-term targets. Making a business plan isn’t easy because it’s complete and made as detailed as possible so that the goals of your company can be achieved. Therefore, making it must be done carefully and not in a hurry.

If you’ve ever written a business idea by creating some content goals that you need to complete, then you’ve written a business plan or at least the most fundamental component of the business plan.

Why is Business Plan so Important?

A business plan is an essential and strategic tool for entrepreneurs. Good business planning not only helps entrepreneurs focus on the specific steps needed for them to make a business idea successful, but it also helps them achieve both short-term and long-term goals. 

Although a business plan is significant for entrepreneurs, some people are reluctant to make their company plans. Business planning is beneficial and valuable for companies looking for funds from investors. In addition business plan can help minimize the risk of your company’s failure. 

The following are the reasons why a business plan is essential:

1. Business plans help companies to attract investors

One of the main functions of a business plan is an important document to find sources of funds or investors who want to invest in your enterprise.

An informative and easy-to-understand business plan will give potential investors a clear picture of your venture. A good and detailed business plan can help you convince potential investors to work with you.

2. Facilitate business development and decision making

The business plan contains an in-depth description of your future business development plans. This document can help with the internal and external needs of the company that aims for business development. 

In addition, that can be used as a tool for decision-making by the company. By making the right decisions about the business plan you have made, you can minimize the risk of failure that can later occur and predict good choices for the future. 

3. Business planning makes the business structure clearer

Because the business plan contains detailed information about your business, such as the company’s vision and mission, financial reports, and complex marketing and sales strategies. Of course, this makes your company’s business structure clearer. 

Also read: ERP Functions for Enterprise Management Efficiency

How to Make a Business Plan

Business Plan: Definition, Benefits, and How to Make it Before Building a Business
Source: idntimes.com

Market Condition Analysis

In analyzing market conditions, you can describe the general picture of the market and the target consumers of the products that your company will market. 

Here’s what you should include in your business plan at this stage: 

  • Market overview, segmentation, potential and growth prospects
  • Target profile and consumer characteristics
  • The level of market competition in the same line of business
  • Market share

Create Your Business Company Description

At this stage, you explain in detail about the business company that is being undertaken. This section is significant because it is an overall reflection of your business enterprise.

The points you can include:

  • Company background
  • Vision and mission of the company
  • The organizational structure of the company
  • Consultant or company expert
  • Company partner
  • Summary of the company’s business objectives

Describe the desired product or service

In this section, you must enter the product or service of your business company in detail and complete. Try to provide an easy-to-understand description of the product or service you are selling. 

Reporting from Kompasiana, we need to master knowledge about a product that we sell because if we do not know more broadly about our product or service, how can we sell our product to others, and how can we convince investors to invest in our company.

For example, if your product is a service product such as a Digital Marketing Agency and filled with experts in their fields. So, describe the product in full to attract the attention of investors because you have explained the product clearly.

Determine the target market of your business company

In this section, you must explain your target market. Explain in detail the target market you want to target, such as the target market’s age, the target market area, and their purchasing power to their daily lives.

If your customers are primarily in shopping centers, you explain what kind of shopping center. If your customers come from the internet, define how many there are and their habits in using the internet.

From this analysis of the target market, you will be able to decide the marketing strategy.

Create a development strategy for your business

After analyzing the market, you have to make other development strategies to support your company to achieve the targets or goals that have been determined in the business plan One of the venture development strategies is a sales strategy and a marketing strategy.

Strategy is the action plan that guides top management decisions and the company resources that make them a lot of work. The strategy in the business plan also affects the organization’s life in the long term, at least for five years. Therefore, the nature of the strategy is future-oriented to develop the business to be advanced

Here are the types of strategies you need to develop for your business: 

  1. Vertical Integration Strategy

Vertical integration requires companies to exercise more control over their distributors, suppliers, and competitors through mergers, acquisitions, or creating their own company. 

  1. Intensive Strategy

This strategy requires intensive efforts to improve the company’s competitive position through existing products.

  1. Diversification Strategy

This strategy is becoming less and less popular, at least in terms of the high level of management difficulty in controlling the activities of different companies.

  1. Defensive Strategy

The survival strategy means that the company takes rescue actions to escape from more significant losses: bankruptcy.

Conclusion

A business plan is a guide or document for your business that outlines goals and details how you plan to achieve those goals.

Before building an enterprise, you need to know the business plan because prospective entrepreneurs are advised to design an enterprise concept to be made first. Without careful business planning, you will not see the direction and purpose of a business that you are living in.

HashMicro is the best Accounting Software provider company for your business company. Automate cash flow management, financial statement generation, bank reconciliation, adjusting journals, invoicing, and more with our best Accounting Software. 

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