Understanding Business Plans – Six Critical Questions Your Business Plan Must Answer 

Last Updated at: May 15, 2020
181
Understanding Business Plans 6 Critical Questions your Business Plan Must Answer

Not having a business plan is like going to an unknown destination without a map” 

Well begun is half done, they say. When it comes to understanding business plans creating a successful business, there is nothing more important than proper planning. Whether you’re just starting out chalking a business idea or preparing to go public, the importance of business planning cannot be overemphasized. A well thought out, the concrete plan would be helpful not just internally – to owners and employees, but also would serve investors and other relationships in the corporate ecosystem. In this post, we highlight several dimensions of executing a business plan that you can creatively use while treading the path to your business plan.  

Creating a business plan template – Essential questions to ask yourself 

The understanding business plans have to be exclusively tailored to suit the target audience – for example, understanding business plans presentation to employees would necessitate more focus on internal arrangements, product development, and marketing, etc, whereas a business pitch to an investor would need a greater focus on sales and cost statistics, future predictions, and long term growth strategies. However, there are some basics that you could use a framework in keeping your business planning on the right track. 

Creating an executive strategy

In the initial planning of creating and understanding business plans, it is important to focus on managing critical resources required to run your business, sourcing raw materials, paying for them, and carving a market share for yourself in the industry. The following pointers could be a reference point- 

  • Think of the product or service you’re offering and the need for it 
  • Focus on what markets you would aim – what are the customers like, their age and preferences, how are you going to reach them – whether through online targeting selling, collaborating with an aggregator of service, through physical stores or door to door selling. 
  • Source of the arrangement of money required to run the business – Whether you’re going to be using your savings, borrowing money from your friends or the bank, whether there are government schemes that could help you avail concessional loans, etc
  • Repaying loans – Once you’ve bootstrapped your business, how are you going to be retiring the money, at what rates, whether flexible options in repayment are available or not, and whether any assets of the business would be used as collateral security? 

Expert Guidance on Business Plan

What makes you unique?

Once you’ve got the logistics figured out, it’s important to convince yourself and others of features that distinguish your business from others in the market – this means having a clear idea of what unique quality in the product, service, delivery channel, market are you going to bring. You may also be offering a completely new product or service and get the first-mover advantage. But also remember, that it’s not always essential to be the first to start, but to be the best. Google, wasn’t the first search engine but has now become synonymous with the service itself. 

Industry and Competition Analysis

Before stepping into the pool, it helps to know how cold and deep the water is. You must know the length, breadth, and depth of industry that you’re planning to enter. Essential questions to ask yourself are

  1. How old is the industry and how are others in the industry faring? 
  2. What is the structure of the industry – are there monopolistic players (such as the toothpaste industry that has a few dominant players), are there barriers to entry of new firms (such as the coal and cement industry that requires many licenses and permits), are firms incurring losses (such as the telecom industry, with almost player running into losses), how are profitable firms in the industry making money and what is their unique selling point. 
  3. PESTLE analysis – this analysis is an acronym for Political, Economic, Social, Technological, Legislative, and Environmental changes. You must have an idea of evolving geopolitics of the region, internal political set up of the country, laws affecting businesses in general and regulations for your industry specifically, technology in your industry, demographics, and society in the area where you plan to operate, etc. These may be too variable to be accurately predicted, but can severely affect the business, if unaccounted for. For example – in this time of Coronavirus, while all other businesses are incurring losses, online study applications like BYJU’S, video calling apps like Zoom, online payment services, and the medical industry generally are recording sky-high profits. This presents a business opportunity in the evolving technological and social landscape. Similarly, a country’s politics and laws may make a business profitable – for example, promoting solar energy in India is a governmental aim and those in the business may stand to gain. 

Creating a brand identity

Once you’ve decided on the product or service and the marketing style – it is important to start early in creating a unique brand identity. It is this that stays in the minds of your potential customers. It could be a color – such as Maggi’s distinct yellow packing or Cadbury’s characteristic purple color, a catchy slogan, and also registering your trademarks and other intellectual property rights. Starting early not just makes sure your target audience remembers you better, it also has legal advantages. In case of a dispute over the same branding name or trademark (the logo and other symbols used by a company), the courts often lean in favor of the first user of the mark or name in dispute. 

Creating a Creative Marketing Plan

In this digitally integrated age of the 21st century, you cannot rely only on classical ways of advertising. Through just newspapers, television, or radio. Make sure you have a lasting impression on your target audience. It is important to engage in creative advertising, especially if you’re targeting a younger age group. There are several ways of doing this – through YouTube, Instagram, using influencers. Additionally, creating a pre-launch campaign, offering freebies and trials. Moreover, setting up promotional desks at places your target audience frequent (such as offices, fairs, schools, exhibitions, etc). 

Finalizing an Operational Plan

This is where you get to real work on creating and making your product or service available. Here are a few steps you could modify to suit your business

  • What is the type and area of business premises you would need to make your product or service? Moreover, identifying it, and finalizing your structure of ownership over it. It also includes such as a purchase, lease, rent or another kind of agreement for the property 
  • Where are you going to source your raw material from? Are there enough sellers in the country? If not, does your international seller guarantee timely shipments, how expensive is the process, what would be the payment cycle, are there any guarantees or insurance by the seller? 
  • Recruiting an able and adequate workforce that would drive your business. And, identifying skillsets required, and choosing the right people to work with.
  • Purchasing or hiring equipment, machinery, vehicles, 
  • Ensuring steady delivery partners and service support
  • Working out an arrangement for distribution – from the factory to the end customer  
  • Pricing styles – It is also important to work out your numbers beforehand, by estimating cost prices and deciding a markup. Some companies prefer starting at a modest price and increasing their prices once they have captured a large market share. For example, Jio started its service for free, but now requires subscribers to pay. Brands that want to come across as luxurious prefer a launching price at a premium. Moreover, largely seen in the categories of – luxury watches, branded clothes, and jewelry. 

Business planning – A Strategic Tool 

As a useful tool in the hands of entrepreneurs, business planning allows risk takers to take a virtual walk down a thorny path. Moreover, to decide if their destination looks promising. However, despite its distinct advantages, planning by its very nature requires estimations, guesswork. Additionally, taking a chance, and is therefore not always accurate. It may sometimes fail, and you may encounter undesirable outcomes. The key to creating a lasting business is to constantly keep evaluating progress against plans. Additionally, alter variables used in decision making, to effectively adjust them in evolving situations. 

 

 

0

Understanding Business Plans – Six Critical Questions Your Business Plan Must Answer 

181

Not having a business plan is like going to an unknown destination without a map” 

Well begun is half done, they say. When it comes to understanding business plans creating a successful business, there is nothing more important than proper planning. Whether you’re just starting out chalking a business idea or preparing to go public, the importance of business planning cannot be overemphasized. A well thought out, the concrete plan would be helpful not just internally – to owners and employees, but also would serve investors and other relationships in the corporate ecosystem. In this post, we highlight several dimensions of executing a business plan that you can creatively use while treading the path to your business plan.  

Creating a business plan template – Essential questions to ask yourself 

The understanding business plans have to be exclusively tailored to suit the target audience – for example, understanding business plans presentation to employees would necessitate more focus on internal arrangements, product development, and marketing, etc, whereas a business pitch to an investor would need a greater focus on sales and cost statistics, future predictions, and long term growth strategies. However, there are some basics that you could use a framework in keeping your business planning on the right track. 

Creating an executive strategy

In the initial planning of creating and understanding business plans, it is important to focus on managing critical resources required to run your business, sourcing raw materials, paying for them, and carving a market share for yourself in the industry. The following pointers could be a reference point- 

  • Think of the product or service you’re offering and the need for it 
  • Focus on what markets you would aim – what are the customers like, their age and preferences, how are you going to reach them – whether through online targeting selling, collaborating with an aggregator of service, through physical stores or door to door selling. 
  • Source of the arrangement of money required to run the business – Whether you’re going to be using your savings, borrowing money from your friends or the bank, whether there are government schemes that could help you avail concessional loans, etc
  • Repaying loans – Once you’ve bootstrapped your business, how are you going to be retiring the money, at what rates, whether flexible options in repayment are available or not, and whether any assets of the business would be used as collateral security? 

Expert Guidance on Business Plan

What makes you unique?

Once you’ve got the logistics figured out, it’s important to convince yourself and others of features that distinguish your business from others in the market – this means having a clear idea of what unique quality in the product, service, delivery channel, market are you going to bring. You may also be offering a completely new product or service and get the first-mover advantage. But also remember, that it’s not always essential to be the first to start, but to be the best. Google, wasn’t the first search engine but has now become synonymous with the service itself. 

Industry and Competition Analysis

Before stepping into the pool, it helps to know how cold and deep the water is. You must know the length, breadth, and depth of industry that you’re planning to enter. Essential questions to ask yourself are

  1. How old is the industry and how are others in the industry faring? 
  2. What is the structure of the industry – are there monopolistic players (such as the toothpaste industry that has a few dominant players), are there barriers to entry of new firms (such as the coal and cement industry that requires many licenses and permits), are firms incurring losses (such as the telecom industry, with almost player running into losses), how are profitable firms in the industry making money and what is their unique selling point. 
  3. PESTLE analysis – this analysis is an acronym for Political, Economic, Social, Technological, Legislative, and Environmental changes. You must have an idea of evolving geopolitics of the region, internal political set up of the country, laws affecting businesses in general and regulations for your industry specifically, technology in your industry, demographics, and society in the area where you plan to operate, etc. These may be too variable to be accurately predicted, but can severely affect the business, if unaccounted for. For example – in this time of Coronavirus, while all other businesses are incurring losses, online study applications like BYJU’S, video calling apps like Zoom, online payment services, and the medical industry generally are recording sky-high profits. This presents a business opportunity in the evolving technological and social landscape. Similarly, a country’s politics and laws may make a business profitable – for example, promoting solar energy in India is a governmental aim and those in the business may stand to gain. 

Creating a brand identity

Once you’ve decided on the product or service and the marketing style – it is important to start early in creating a unique brand identity. It is this that stays in the minds of your potential customers. It could be a color – such as Maggi’s distinct yellow packing or Cadbury’s characteristic purple color, a catchy slogan, and also registering your trademarks and other intellectual property rights. Starting early not just makes sure your target audience remembers you better, it also has legal advantages. In case of a dispute over the same branding name or trademark (the logo and other symbols used by a company), the courts often lean in favor of the first user of the mark or name in dispute. 

Creating a Creative Marketing Plan

In this digitally integrated age of the 21st century, you cannot rely only on classical ways of advertising. Through just newspapers, television, or radio. Make sure you have a lasting impression on your target audience. It is important to engage in creative advertising, especially if you’re targeting a younger age group. There are several ways of doing this – through YouTube, Instagram, using influencers. Additionally, creating a pre-launch campaign, offering freebies and trials. Moreover, setting up promotional desks at places your target audience frequent (such as offices, fairs, schools, exhibitions, etc). 

Finalizing an Operational Plan

This is where you get to real work on creating and making your product or service available. Here are a few steps you could modify to suit your business

  • What is the type and area of business premises you would need to make your product or service? Moreover, identifying it, and finalizing your structure of ownership over it. It also includes such as a purchase, lease, rent or another kind of agreement for the property 
  • Where are you going to source your raw material from? Are there enough sellers in the country? If not, does your international seller guarantee timely shipments, how expensive is the process, what would be the payment cycle, are there any guarantees or insurance by the seller? 
  • Recruiting an able and adequate workforce that would drive your business. And, identifying skillsets required, and choosing the right people to work with.
  • Purchasing or hiring equipment, machinery, vehicles, 
  • Ensuring steady delivery partners and service support
  • Working out an arrangement for distribution – from the factory to the end customer  
  • Pricing styles – It is also important to work out your numbers beforehand, by estimating cost prices and deciding a markup. Some companies prefer starting at a modest price and increasing their prices once they have captured a large market share. For example, Jio started its service for free, but now requires subscribers to pay. Brands that want to come across as luxurious prefer a launching price at a premium. Moreover, largely seen in the categories of – luxury watches, branded clothes, and jewelry. 

Business planning – A Strategic Tool 

As a useful tool in the hands of entrepreneurs, business planning allows risk takers to take a virtual walk down a thorny path. Moreover, to decide if their destination looks promising. However, despite its distinct advantages, planning by its very nature requires estimations, guesswork. Additionally, taking a chance, and is therefore not always accurate. It may sometimes fail, and you may encounter undesirable outcomes. The key to creating a lasting business is to constantly keep evaluating progress against plans. Additionally, alter variables used in decision making, to effectively adjust them in evolving situations. 

 

 

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Avani Mishra is a graduate in law from the National Law Institute University, Bhopal. She qualified the Company Secretary course with an All India Rank 1 and is a recipient of the President’s Gold Medal for her academic distinctions. She also holds a B.Com degree with a specialization in Corporate Affairs and Administration.