How to Make a Sample & Great Business Plan Step by Step in 2020

How to Make a Business plan For 2020:

                                                                  Do you know that Start-Ups in the US are 2.5 times more likely to go into business if they have a written business plan?

Developing a business plan is one of the most critical steps in starting a business. It sets out the business goals, market analysis, and prospective financial information. A business plan provides a rationale for starting a business. It chalks out various milestones and targets for the entrepreneur. It defines the product or services offered and tells how the new entity is uniquely positioned to capture the market. The document also plans how much funds will be required for starting the business and who will provide the necessary funds.

A business plan is a thorough document. An ideal business plan would have no vague area. The primary purpose of a business plan is to manage execution risk. Having an obscure area means that there is a gray area that may result in the delay of implementation of the project and may result in a postponement in expected return as provided in the plan. In other words, a business plan is working through each element to ensure nothing is overlooked.

A business is there to make a profit. The only way to find out whether the entity is profitable and viable is to work out details of costs and incomes. For estimating expenses and revenues, we need to understand our product/services, their market costs, and our costs to manufacture the products or deliver those services. There are some important points that helps to you make Business plan.

      I.        IDEA

    II.        STRATEGY

   III.        FUNDING

  IV.        CUSTOMER

    V.        EXPENSES

  VI.        MARKET

 VII.        SALES

VIII.        FORECAST

  IX.        ENTREPRENEUR

IDEA :

                                                                   Many times, you have a unique idea that you think can be the next breakthrough in your industry, but you don’t know how to go about it. A few months down the road, you see somebody else doing business using your idea.

All people are thinking and generating these ideas but there are only a few who take up the challenge of transforming their idea into a business. Did you ever think why is that? My analysis is that when it comes to the nitty-gritty, most of the people find it difficult to fully conceive the cycle of project development.  And even if they know the fine details, they are overwhelmed by the amount of work and tasks to be performed.

So next time, whenever you have an idea, write it down and try to get the answers to the following questions:

1.    Is the idea technically feasible;

2.    Is there a market of the idea we are floating;

3.    The idea is financially feasible.

Once you are satisfied that the idea met the above criteria, the next phase is to weave the infrastructure around your idea. The first phase of the transformation will need the following:

1.    Product / Service development

2.    Corporate structure

3.    Office/admin infrastructure

Your top priority is to develop the product or service and test it in the market. You will only get the competitive advantage if you develop the product /service efficiently in a cost relatively lower than the market cost.

Once you are pretty sure that you have a competitive edge, the next step is to set up a corporate and administrative infrastructure. The corporate and admin infrastructure depend largely on the type of product /service, however, as an entrepreneur, your goal should be to keep these costs at a minimum level, at least in the first phase. There are many ideas you can use to keep your costs minimum such as:

1.    Many entrepreneurs use their basements as their first office; you may use shared space in the earlier period to reduce the costs

2.    Rather than hiring full-time staff and paying salaries, you may outsource many functions such as marketing, accounting, IT services such as emails, websites, etc.

If you are confident that the products/services are stable and can be offered to public at large. It is time to move to the next phase that is a full-scale phase. Estimate the market price of the product/service and cost of making that product or delivering that service. The difference between the price and variable cost is your estimated contribution margin (A). For instance, if your sale price is $100 and your variable cost is $65, the contribution margin will be $35 ($100 – $65)

Once you estimate the contribution margin, do the following calculation:

1.    Decide how much profit you would like to make (B). Let’s assume you want to make a profit of $50,000

2.    Estimate total fixed cost (C). Assume your fixed cost is $16,500

3.    Add your profit and fixed cost (D = B + C). So in this example, your profit and fixed costs will be $66,500

4.    Divide profit and fixed cost by contribution margin (D / A ). Dividing $66,500/$35 gives 1,900. So 1,900 is the number of products/services that you should sell to achieve a profit of $50,000

The calculations are easy but the real catch is in the implementation of the project. Wish you best of luck for the transformation of your ideas into business.

STRATEGY :

                                                              Business planning is necessary for company growth and success. Business plans provide companies with the tools to track growth, establish a budget and prepare for unforeseen changes in the market place. A strategic plan includes many elements a business can utilize to attract financing and manage company objectives. To optimize strategic business planning, businesses must clearly define company goals and conduct extensive research to properly understand industry trends.

Definition

A strategic business plan is a written document that pairs the objectives of a company with the needs of the market place. Although a strategic business plan contains similar elements of a traditional plan, a strategic plan takes planning a step further by not only defining company goals but utilizing those goals to take advantage of available business opportunities. This is achieved by carefully analyzing a particular business industry and being honest about your company's strength and weakness in meeting the needs of the industry.

Significance

A strategic business plan is necessary to optimize market research and to attain optimum market share for your business. The plan allows businesses to focus on a particular niche in the marketplace, which makes sales, advertising and customer management more effective. The plan allows a company to know as much as possible about the needs of its customers and gaps in the marketplace that need to be filled. A strategic business plan helps a company provide better, more targeted service to its clients.

Characteristics

A strategic business plan includes extensive market research, industry trends and competitor analyses. A strategic plan will include the components of a traditional plan, such as an executive summary, marketing analysis and financial statements, but a strategic plan will be more specific on how the company will go about achieving company goals. For example, a strategic business plan will attempt to identify a target market, narrow it down to a manageable size, and establish a strategy for acquiring those customers.

Benefits

Writing a strategic business plan has many advantages. The plan can serve as an outline for successful completion of company milestones. Company owners are in a better position to not only understand their business but become experts in their industries. A strategic plan helps executives understand the direction in which their company is headed by reviewing past progress and making changes to improve and grow. The plan is an organizational tool that helps to keep a company on track to meet growth and financial objectives.

Misconceptions

Many small business owners feel that strategic business plans are for large companies and big businesses. However, according to the Small Business Administration, a strategic business plan can benefit companies of all sizes and can be a great advantage to small businesses. Small businesses may utilize the document to develop the strategies necessary to attract and retain the customers it needs to succeed.

FUNDING:

You find yourself at a juncture where you believe you have an innovative ophthalmic product on your hands, one that could be of significant value to stakeholders (patients, physicians, payors). You have sought input from experts and they agree you have something; the concept is solid, the data is supportive, the medical and market needs are clear. Now, however, you realize that to advance the concept requires large amounts of money and additional expertise. So now what? You’ve resolved to seek investors. What considerations are there for financing.

Funding: Family, Friends, Angels & VCs

Since 2008, venture capital investment is increasingly difficult to secure due to the contraction in both the number of Life Science VC firms and the total capital allocated to them by their limited partners. Generally, VCs have shifted away from investing in early-stage programs due to the high risk associated with them, coupled with a lack of historical returns.

Most life science exits are realized via company purchase (merger & acquisition) or a licensing/option deal before your product generates a single dollar of sales. Alternatively, investors may exit via the company accessing the public markets, but only recently has the initial public offering window opened. As an ophthalmic innovator, your goal is to advance your program towards commercialization while optimizing the potential return on investment for founders, employees and investors. It’s necessary to have a well thought-out development plan with clear milestones in place to maximize ROI and appropriately frame an investment for investors. It will guide you towards securing follow-on financing rounds via realistic company valuations achieved at predefined value inflection points (such as achieving first human proof-of-concept).

Strategic Investors/Partnerships

Corporate Venture Capital has grown dramatically in the last decade to fill the void as traditional venture has contracted and moved away from early stage, higher-risk investments. Importantly, these firms help provide big pharma and device companies the opportunity to avoid an innovation gap and thus provide products needed to supplement product development pipelines. This has also been valuable to offset pharma’s business-development groups who have moved towards licensing and acquiring later-stage development programs that are significantly de-risked via costly clinical efficacy studies. Many early stage Series A and Series B rounds of financing have CVC in the investor syndicate. Pharma understands corporate venture activity is essential to the health of the early-stage ecosystem that the industry relies on for future product innovation.

Non-Traditional Sources

Foundations provide grants that represent non-dilutive seed capital to conduct initial research and advance product concepts towards human clinical studies. While some foundations will fund clinical trials, grants are typically designed to cover costs for translational research and investigational new drug-enabling studies.

Ophthalmic-specific foundations such as Foundation Fighting Blindness, the National Neurovision Research Institute and the Glaucoma Research Foundation look to fund novel research to treat ophthalmic diseases and subsequently translate that research into the clinic. Federal grants can provide funding to academics and innovators to advance their programs. In addition, universities have created innovation centers that provide lab space for innovators to conduct research and/or commercialize their findings. Additionally, research incubators are another resource that can help your development program reach a value inflection point in a capital efficient manner.

Customer Business Planning:

                                                             Developing and activating effective Business Plans is mission critical for today’s consumer products retailers and suppliers. The consumer products and retailing industry is very competitive and companies that leverage strong business planning processes and tools are gaining clear advantage. Companies with a well-defined Business planning process are able to formulate winning plans, develop strong product and retail initiatives (due to longer term planning) and execute more effectively and efficiently. Not every Retailer is willing and able to partner in a “joint” planning way, but every sales person needs to have a “customer business plan” in place to drive clear focus and direction.

What We Do:

TPG’s Customer Business Planning Program helps manufacturers develop and activate an effective and efficient plan with all Retailers. It supplements TPG’s Industry Best Practice Joint Business Planning approach which is handled in a separate section of our website. The key inputs needed for success are:

o    Shopper and Marketplace insights as inputs into defined strategies and initiatives

o    Strong working relationships (focused time & effort)

o    Investment into demand driving or cost-cutting initiatives

How to Perform a Market Analysis:

                                               Experienced research firms understand how to conduct a market analysis so that it is both comprehensive and concise, answering a range of questions, including (but not limited to):

1.    What is the market size?

2.    Who is the target customer?

3.    What is the competitor environment?

4.    Is the market growing or contracting?

5.    What are potential disruptors?

Taking into account these key queries, a market analysis provides a high-level perspective on the business environment, identifying both opportunities and restraining factors. Credible market research firms can combine primary and secondary research like government statistics, trade publications, and interviews with other industry experts to answer these questions and generate the most accurate possible picture of the industry.

Sales:

                               A sales plan is a document used to establish sales objectives and develop strategies necessary to achieve them. Typically, this document establishes a plan for revenue growth and other measurements of success. Sales plans consist of sections outlining goals, identifying key customer attributes, and listing necessary strategies, tools, metrics, and estimated expenses.

A sales plan works best when you are able to regularly review its performance.

Forecasting:

Your sales forecast is the foundation of the financial story that you are creating for your business. Once you have your sales forecast complete, you’ll be able to easily create your profit and loss statement, cash flow, and balance sheet.

But beyond just setting the stage for a complete financial forecast, your sales forecast is really all about setting goals for your company. What do you hope to achieve? How many customers do you hope to have next month and next year? How much will each customer hopefully spend with your company? Your sales forecast will help you answer all of these questions.

Your sales forecast is also your guide to how much you should be spending. Assuming you want to run a profitable business, you’ll use your sales forecast to guide what you should be spending on marketing to acquire new customers and how much you should be spending on operations and administration. Now, you don’t always need to be profitable, especially if you are trying to expand aggressively. But, you’ll eventually need your expenses to be less than your sales in order to turn a profit.

ENTREPRENEUR:

An entrepreneur trying to start their own business needs to have a business plan. The business plan is a guide helps business owners stay focused on their goals and serves as a tool to lure investors and lending institutions to finance the business. To write an effective business plan, you need to complete several steps to ensure that the final plan includes the necessary elements.

1. 

Use the outline format of any word processing program to create a business plan. An outline format makes the plan easier to read and easier to fill in any details you need to add later.

2. 

Describe your business in the first section. Explain the kinds of products or services your business will offer, how you plan to manufacture the product or administer the service and what materials you will need. Include details about the kind of facility you will need and the types of equipment required.

3. 

Create a business budget and break it down into three parts: start-up costs, ongoing operating costs and a breakdown of the overhead into sections such as manpower and materials. Provide as many details as possible in the budget section. Forecast your budget needs for ongoing operating costs for at least three years. Break the budget down by department, including sales, marketing, production and support.

4. 

Develop a profit projection that shows the percentage growth you expect for the next three years. Cite reasons for your forecast and give examples of how you intend to grow your company.

5. 

Present a sales and marketing plan that includes detailed analysis of your competition, how you intend to address the competition and a detailed explanation of how you will bring your product or service to the marketplace.

6. 

Create a biographical section that features information about all executives and partners who will be involved in the company. Include compensation plans, detailed job descriptions for each person and resumes that outline past experience within the industry.