Characteristics Of A Quality Business plan
A business plan is a model of your prospective business. It is like a manual or a guide for your business. Thus, special care should be taken when drawing up your business plan. This care does not relate to the technical correctness of your business plan (which is necessary). But rather, more importantly, it concerns the implementation of the plan. That is, how the business plan is carried out.
Your business plan can make or mar the chances of your startup. This is because, aside from being the blueprint for the internal workings of your startup, it also plays an essential role in terms of attracting the needed funding from the Investors and banks.
Below are Characteristics Of A Quality Business plan
It Should Be As Simple And Understandable As Possible
With this Basic feature there is no need to draw up a plan for a business that nobody understands. Usually, when a business plan is unnecessarily complex, it simply means that the proposed business venture is also complex. Investors do not like complex. Investors want to be able to listen to your pitch for 3 minutes and decide if they will invest in your idea or not. Another reason you want to make your business plan simple and understandable is for the sake of the internal workings of your startup. Your team wants to know the direction of the startup and how it intends to get there.
It Should Be Realistic
Having a realistic business plan means that you should not promise what you can not do. In fact, you should already have a proven way to either make that product or offer that service before you make promises on it. If by all your calculations, you should be able to meet the promise at a specified time, then it wouldn’t hurt to wait till that particular time, achieve your aim, then before you start promising to be able to do the said thing in your business plan and pitches. In fact, then you sound more convincing to Investors. Neglecting this principle has led to a lot of companies meeting their premature end.
Theranos was a privately held blood testing company based in the United States, that promised to conduct a variety of tests from just a pinprick of the finger using proprietary technology. At its highest point in 2015, it was valued at 9 billion dollars. Its founder, Elizabeth Holmes, who owned half of the company had a net worth of 4.5 billion dollars and was the richest, female self-made billionaire in the world at the time. Fast forward to 2018, the company had completely shut down, now valued at zero dollars and with dozens of lawsuits filed against the company and its founder. The cause of the change in fortune of this seemingly wonderful business is that it promised what it could not deliver. According to medical experts, it is not possible to conduct that much variety of tests with just a finger prick of blood.
Inventions and innovations are always welcome and appreciated, but it is best not to promise the moon.
Your Business Plan Should Position You To Make Profit
Your business plan should position your startup to make a profit from the very beginning with a Characteristics Of A Quality Business plan
Starting a business is already a very difficult task to engage in with a very high failure rate. There is no reason to make your task even harder by designing a business that makes a loss. As simple as this may sound, there are prospective entrepreneurs who continuously neglect this principle. They usually come up with very colorful reasons for their action. The matter is quite simple. You have a very little chance of surviving as an entrepreneur, and an even smaller one if you intend to make a loss first before turning a profit. Rationally, you should be running away from such kind of a business model.
Always aim to make a profit. Offer great goods or services at a reasonable price that covers your cost of production, while leaving some profit to be reinvested. This way, the company can sustain its self without continuous investment from the shareholders.
It Should Specify Your Competition
While it is advised not to focus on your competitors, it is necessary for you to be aware of them. Specify in your business plan, how you intend to differentiate your product or service from that of your competitors in order to cut out a market share for yourself.
Usually, startups resort to selling at a lower price than their competitors, which I find irrational. As a startup, you are considered a small business, so engaging in price challenge with established competitors is not advised. There are other ways to cut out your market share which can include selling a product that is of better quality than your competitors or offering a service in better ways than your competitors.
If you have a better way of offering a service, which could be faster or more aesthetically pleasing, stress this in your marketing campaigns.
Adopt The Principle Of Lean Manufacturing
Gone are the days when companies manufactured large quantities of goods with the hope that they would be what customers need. Nowadays, customers’ feedbacks are used to make products or services that are specific to their needs.
The principle of lean manufacturing simply aims to get customers more involved in the decision making of what should be produced. This is quite understandable considering that these products are made for them. Toyota is the most popular as well as one of the earliest lean manufacturers.