One of the weaknesses of Small-Medium Enterprises (SMEs) is ignoring the importance of a business plan. A business plan is a roadmap of what, why, how, when, who, and where the business will be pioneered or already running. In fact, a roadmap is a travel guideline for SMEs actors to achieve their business goals. In addition, this document is usually required by investors, partners, and financial institutions and or banks when SMEs intend to apply for business capital credit.
A business plan generally consists of business objectives, strategies used to achieve them, potential problems that will approximately be faced and how to address them, organizational structure (including positions and responsibilities), and the capital needed to finance the company and how to maintain it until it breaks even or returns capital. Interestingly or not a business plan also depends on how to write and structure it. Often we have a brilliant business idea, but are not regular in expressing it in the business plan.
A business plan has 3 (three) main parts. The first is the business concept, which describes in detail the industry involved, the structure of the business, the products and services offered and how you plan to succeed your business. The second is the market, which discusses and analyzes potential consumers: who and where they are, what causes them to buy, and others. In this section, you also need to explain the competition you will face and how you position yourself to win it. Third, finance includes estimates of income and cash flow, balance sheets and other financial ratios, such as capital return counts.
These three parts can be divided further, into 10 key components:
The first is executive summary. The executive summary is the focal point of business planning, written after the document is completed. The goal is to provide a picture of the proposer’s business planning to the ‘reader’ in this case a capital lender or cooperation partner. The executive summary should be clear, precise and concise (no more than 2 pages). In this section it is explained about business concepts, implementation plans, and estimates of business results.
The second is overview of the effort and its potential, it contains about:
- It is the product to be produced. Give a brief explanation of the ‘product’ in the form of goods or services offered. Explanation is as simple as possible but quite obvious to the layperson, as the coworker may not understand the product offered. Also explain the advantages of the products offered compared to those already on the market.
- Marketing environment. In this section, identify who the main players in the market are, leadership, prices and costs, or the competition that occurs in this activity/business plan.
The third is operational plan, which includes: 1) Business location; 2) The process of purchasing and storing raw materials and supporting facilities; 3) The main production process, its supporting facilities and production plans from time to time; and 4) The process of distribution and storage of finished products and their supporting facilities
The fourth is marketing plan, which is a plan to introduce the product to the market and the techniques that will be used to influence consumers to buy the product, along with its supporting facilities
The fifth is organizational plan, which contains the division of tasks in carrying out the business which is then outlined in an organizational structure (along with an explanation of the amount of salary and additional benefits of everyone in the organization)
The sixth is financial plan, contains about the plan to obtain investment funds, plans for financing the production process and a description of the use of business income (to be raised money obtained from the sale of products)
The seventh is investment analysis, which is a calculation of all costs incurred as a result of the proposed business plan outlined in the previous section and the estimated income to find out whether this business is worth running or not.
The eighth is risk Analysis. Provide an overview of the risks that may occur and how to mitigate these risks.
The ninth is action plan. Describe systematically the activities / efforts that must be done (including work schedules). Must be taken into account the needs that need to be met, for example the technology used, the number of employees needed, other resources needed (finance, product distribution, promotion), and availability of raw materials.
The tenth is supporting documents. Mention the required supporting documents, such as references and attachments
The question is how many pages an ideal business plan should be written. Number of pages depend on the function of business planning itself. Usually the business plan is 15-20 pages thick. But if you’re applying for a new business, then you’ll need more explanation to deliver it, maybe even up to 100 more pages.
Similarly, if you need millions of dollars as capital to start a risky business, then you need to provide a lot of explanation / information to convince. But if you only want to use the planning for internal purposes, to organize your business, then a shortened version is sufficient.
No less important in preparing a business plan is to avoid the following in preparing a business plan: 1) unrealistic goals and objectives, 2) failure to anticipate problems that may arise, 3) the absence of commitment from the actors / decision makers, and 4) the absence of a ‘niche market’.