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Why Prepare a Business
Plan?
Whether the Business Plan is aimed at
inviting potential investors or bankers, or obtaining JTC or other government industrial
property, it serves the following fundamental
objectives :
- To convince yourself and external
parties that your business is viable and potentially
profitable.
- To show in figures how much the
business is expected to make in terms of revenue, profits and return
on investment. The way the figures are derived has to be
credible, realistic and achievable.
- To think through thoroughly how
you'll operate and run the business, and strategies to employ. Whether the financial projections are achievable and
realistic hinges very much on the supporting strategies and
operational details.
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Key Content of a Business Plan
The key areas to cover are :
- Uniqueness of Business Model - how
different your business concept, products or services are compared to
existing offerings in the market
- Target Market Segments - which
customers' needs, customer group, industry sector and geographical
market you are serving
- Scalability of Business Model -
whether it can be easily replicated across market segments ie. different
industries, countries and user groups
- Market Condition - current market
size, market growth potential, market saturation (intensity of
competition), profile and practices of key competitors, opportunities
and threats. It is necessary to quote market data from
credible sources to justify the market prospects.
- Your competitive edge and how you
plan to sustain it
- Revenue model ie. sources and rates
- Strength of Management Team
- Financial Projections for at least
the next three years in terms of profit & loss and cash flow on a
quarterly basis. The cash flow projection will show how much
funds you need to inject every quarter to sustain the operation.
The projections should be supported by bases and assumptions that are
credible, realistic and achievable.
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