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Business Planning: It’s Importance, Types and Key Elements

Introduction


Do you have an idea for the perfect business? Are you sure it’s going to work and return profit? 


Everyone wants an easygoing business that will help them gain huge profits. However, an idea for a business is not enough. 


Business planning infographic highlighting importance, types, and key elements with handshake image

Instead, you need to go through thorough business planning even before its inception. Several businesses fail due to a lack of proper planning. 


But what comes under business planning? Let us find out 10 key elements that fall under business planning and are crucial for its success.


What Is Business Planning?


The business planning process begins with an idea where you decide what products or services it will offer. 


Next, it includes figuring out what goals you want your business to fulfil. This leads you to plan effective strategies and a roadmap towards achieving these goals. 


In a nutshell, business planning includes deciding and planning ahead for every aspect of your business even before you start it. 


5 Types Of Business Planning


1: Start-Up Business Planning

This type of business planning includes figuring out the products and services that will be sold to benefit its consumers and earn profit for the company. 


Start-up business planning also involves making a financial plan and budget for the investors so they can judge the probability of success.


2: Feasibility Business Planning

Feasibility business planning mostly includes drawing up an idea of how much success a business can achieve. It also involves creating a prospective consumer base and what their needs and demands can be. 


This helps to further determine the probable success or loss caused by the launch of a product or service. 


Thinking ahead helps to soften the blow caused by losses while also helping to handle the success and further optimise marketing strategies.



3: Expansion Business Planning

The expansion business planning process usually takes place when a brand wants to expand its market reach or infrastructure. 


It includes breaking down the expansion process into small achievable steps and the resources required to fulfil them. 


This also helps the management determine future resource allocation and the employment of more staff if required. 


4: Operational Business Planning

The operational business planning consists of plans and objectives for an entire year. This helps a business put resources and activities into perspective and make their plans more efficient to reach the end goal. 


This operational plan determines the roles and responsibilities of every employee of the company which contribute together to fulfilling the end-year objectives.



5: Strategic Business Planning

The strategic planning of a business helps to formulate effective plans and strategies to boost its profits. 


This is done by evaluating the strengths and weaknesses of the company, utilising the strengths, and forming compensation plans for the weaknesses. 


This type of planning allows the company to strategise its way towards success.


10 Key Components Of Business Planning


1: Executive Summary Of The Business

If you had to summarise the entire plot of a novel, the result would have been the same as that of an executive summary. Only in this case, it will be a summarisation of your business venture. 


It is usually compiled at the end of your business plan because it consists of all the information about your company. 


However, it serves as an introductory section for your business and serves as a first impression for investors and consumers. 


Thus, you must mention your goals and objectives, products or services, plan for the future, and how you can benefit the people clearly in the executive summary.


2: Description Of The Business

This is the second most important key component of a business plan which offers an overview of what your business is selling. It provides a brief description of the products and services offered by your brand. 


At the same time, it should also mention what makes your business unique. With so much competition in the market, it is necessary to stand out among other businesses by highlighting your key features and strengths.


3: Analysis Of The Business Landscape

The next step in planning a business is to conduct extensive market research so that you can clearly understand the landscape you will be pitching your products and services to. 


It is important to find out who your target audience is. This will help you to allocate resources and plan strategies accordingly for guaranteed profit. 


Moreover, the analysis of the business landscape will inform you about your current position in the tough competition market so that you can accordingly plan a strategic roadmap towards success.


4: Marketing Strategies Of The Business

Now that you have determined who your target market is, the next step of business planning includes figuring out effective ways and strategies by which your business will appeal to the target audience and ensure they stay. 


It also requires you to plan the channels and modes through which you will attract potential customers and convert them into permanent ones.



5: Operational And Management Strategies

This element of the business planning process involves figuring out effective operational and management strategies that will benefit the customers without harming the integrity and profit of the business. 


This implies that you must determine strategies that will guarantee top-notch quality of the products and services, yet save money and time for the company. It indicates drawing smart strategies for a profitable business outcome.


6: A Detailed SWOT Analysis

It is always better to know beforehand how you can leverage your business or what can cause its downfall to have better control or compensate for the damage. 


This is why your business plan must include a SWOT analysis which expands to a detailed description of your strengths, weaknesses, opportunities, and threats. It helps you know what assets you have and also where you can improve. 


Moreover, the SWOT analysis gives a clear understanding of how you can keep up with the tough competition around you.


7: Financial Plan Of The Business

It is highly necessary for a business to have a financial plan by thinking a few years ahead. It not only helps companies allocate their resources efficiently but is also an excellent way to appeal to investors and sponsors. 


A financial plan can also determine how the company plans to bring in revenue and profit. When a company has financial targets to achieve in its plan, it offers a direction and purpose to move forward.


8: Description Of Products Or Services Offered

The executive summary of your company includes a brief description of your products and services which is why you must have a detailed analysis and description of the products and services offered by your brand. 


This must include every detail about your manufacturing processes, benefits offered to the consumers, and a tentative calculation of how much time it will take and what it may cost.



9: Analysis Of Competitor Businesses

It has already been emphasised how important it is to have a clear understanding of the strengths and weaknesses of your company. 


However, business planning also includes researching competitor businesses and finding out their pros and cons. It helps you discover your advantages over them and work on your shortcomings. 


Knowing how your business is different from the rest will help you appeal to the customers in a specific way.


10: The Management Team

Finally, it is extremely important to have detailed knowledge about who is going to run the business as well as every other personnel involved in it. You must get to know your team which is crucial to establishing a positive work culture. 


Moreover, having a good understanding of their strengths will allow you to utilise them while knowing about their drawbacks beforehand can be worked upon.


Conclusion


Thus, it can be concluded that business planning is incomplete without 10 key elements that are crucial for its success. You cannot merely build on an idea. Instead, you must plan first. 


This includes having a financial plan with achievable targets, effective strategies to help you achieve them, sustainable methods of manufacturing to save time and cost, a clear idea of how you can reach out to your customers, and knowing your team. 


If you plan your business beforehand, you will be able to manoeuvre its path towards success or control any damage it incurs.


Is your business crumbling under heavy debts and poor team coordination? You are not alone! You can swiftly turn your business around with the help of Jivan Pant, an eminent business coach! He can guide you to foster a positive working environment, allocate funds wisely, and implement effective marketing strategies. So why are you still hesitating? Register for business coaching sessions with Jivan Pant today!


Frequently Asked Questions


Q1: What are the key elements of a business plan?


Ans: There are 10 key elements of a business plan and they are an executive summary of the business, a brief description of what it offers, an analysis of the marketplace, marketing strategies to be implemented, efficient operational and management strategies, a SWOT analysis, a financial budget, detailed description of what the business offers, analysis of the competitors, and details about the management team.


Q2: What is the first element of a business plan?


Ans: The first element of a business plan is an executive summary which is usually prepared at the end. Yet, it serves as an introduction for the business by explaining what it offers, how it offers, and what its goals are.


Q3: What are the two types of business plans?


Ans: The two types of business plans are traditional and lean startup. Traditional businesses also need plans to have a roadmap with yearly goals and objectives. At the same time, startup businesses are bound to have a plan to sustain themselves in the tough market.


Q4: How to structure a business?


Ans: A business should be structured by incorporating the 10 key elements which include having achievable goals and targets, a financial budget, a clear understanding of what it offers, and how it can attract the target market.


Q5: What are the five types of business planning?


Ans: The five types of business planning are startup, feasibility, expansion, operational, and strategic business planning.

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