Before you set up any business, the most important thing is your business plan. This plan is your road map to your business destination. As you probably know, setting up your business is just the first step on the journey. Getting to the destination requires diligence, strategy, money management and other vital skills. Professional business plans should cover all these things and more. Once you have the right plan, your chances of success are very bright. Below are some things your business plan must address.
Capital
In the context of this article, capital is not restricted to the amount of cash you want to invest in the business. Capital here refers to cash in the bank, operating capital, strategic reserves and human capital. You should allot a specific amount of money to each of these areas and keep detailed records of how you spend your cash.
Payback Period
You are not likely to start making profit immediately you set up your business. Your business needs time to grow so factor this into your plan. If things go well, you might start making profit after six months of running the business. However, before the profits begin to roll in, you have to pay salaries and spend money on overhead costs. This is why you should manage your finances carefully so that you do not run out of cash before you start making profit.
Expansion Plans
Your dream is to grow your business and expand after a while. You also plan to diversify if things go well. The point is that you cannot put your expansion plans to work if your business is not on a sound footing. A gradual expansion is always better than one huge step that may leave you over-extended. Expansion is part of your long term business plan but you should do this carefully.
Depreciation
With time, you will replace or repair some of your equipment. This is why you should include depreciation in your business plan. If it is time to replace some of equipment or machinery, you must find the cash to do this. If you do not have the money at the time, you might consider leasing.
Re-investing
If your business is doing well, you should not use your profits to finance an expensive lifestyle. Re-invest some of your profits so that the outfit will get even bigger and more profitable.
Final Word
Running a business is challenging but it is also rewarding and exciting. Professional business plans contain all the strategies that will help you set up and run a successful enterprise.
