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How can I come up with sound business plan

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For further guidance on business planning, please see the answers to the following question here at the Micro Mentor Q&A Feature:

Report Kenneth's answer

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Business Plans come in varying sizes and shapes, depending on how complex and advanced your business is and what you're planning on using it for. There are elements that will be for your own use, capturing the logic and thinking processes you've employed. There will also be elements that will be important if you're using it to justify business loans that you're looking for. Ultimately, any strategy or business plan presents a theory of where, how and why you'll grow, so it contains all the assumptions that will be used to guide your actions, but also explain to others.

Here are the elements I consider important in a business plan. Take it with a grain of salt, because everyone does it a bit differently, and the point is simply to use it as a framework to build out a plan that makes sense, and is built on assumptions that will hold up over time. Launching a business is exciting, however, it's usually best to ensure you have

Strategic Framework: This defines who you are, why you're here, and what you do

Vision, Mission, Values: This provides the highest level guidance on the purpose of the organization, and the ethical and cultural boundaries within which the team should work. The longer you plan, the more you’ll realize how important this decision is. Your CEO should talk about this in a hundred different ways, and draw attention to it often.

Value: Look up the concept of value disciplines and put some thought into how you're going to compete. Are you seeking customers that want the cheapest option, the absolute best, or one that's customized just for them. Doing one of these 3 things well will help customers understand what makes you special.

Market: What you sell, what your target market is, who your competitors are Your advantage: Articulation of what your competitive advantage is, what your basis for some kind of advantage is. Be clear on whether it’s a comparative advantage (lower cost) or a differential advantage (better technology, patents, personnel, brand), and then how you’re building that edge is central to the concept of competing. Also, put some thought into whether you actually have an advantage that others can't replicate or if there's a way to build that.

Analytical Framework Usage: This summarizes the analysis you've done about your target market There are many, and the point of these is to create a common understanding of the profit potential within your market, to identify the factors that limit that, to look at the strengths and weaknesses of your company, identify opportunities to influence all of these, consider potential future scenarios and how you’d act within each eventuality. Generally, the more time you can spend here, the better. Start with a SWOT or PESTEL analysis.

The assumptions underpinning your strategy: You can’t manage what you can’t identify. Every decision being made is based on assumptions, many of which are never verbally articulated. All of these assumptions change in accuracy over time. When you articulate them, it allows the team to systematically question them, so that you can change tack when the underlying conditions change. This makes you more agile. This is a good way to test your own logic.

A measurement system that includes objectives, some kind of measurement that will indicate if you're moving toward your goal or not, and then the actions you'll take to improve your positioning. A financial model that explains and projects the output of the plan, the investments being made and the likely outcomes: The financial model and projections are essential. Most organizations are more comfortable with the financial perspective than the strategic one, to the extent that they’re built in isolation of the other. Build processes wherein they are built to work together.

Acknowledgement of strategic risks and the risk tolerance of the organization: Informed decision making requires the perspective of which risks have the greatest likelihood to take your organization down, and ideally your board should provide both tolerance and appetite statements to define the aggressiveness of the organization in terms of taking risks to achieve the strategy, as well as the ideal zone they want to stay within. This protects the CEO by maintaining explicit expectations.

Report Kirk J.'s answer

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