Understand How to Write a Business Plan In Nigeria 2020
How to Write a Business Plan in Nigeria – In a country like Nigeria, we see so many graduate looking for a job and the government cannot provide jobs or even do anything about it they can do no little or much in other to help their citizens get employment, the country seems to be the problem when it comes to job creation and there is no social program for citizens.
The only way out is to startup a business or becoming an entrepreneur is now the only way out and most people would want to put a food in their table and help their families. The SMSE which is the Small and Medium Scale Enterprises is the best bet and those who do not want to keep waiting for the governmental jobs or opportunities will therefore start springing up their own personal business, many Nigerians quickly rush into business they have no idea what the business is and how to plan for it. For that reason of not knowing they last for while and end up folding up the business and become bankrupt falling back to square one.
This is because of lack of business ideas, base on that the business fails so here is some little fact, it is either a small scale business or one is starting a multinational business, one should know that starting a business needs planning; If you want to get your business up and running one must conduct a lot of planning, find out about the capacity building and carry out a lot of exploratory ways on how one should maximize the opportunity of a business idea. If you are able to bring all this together is will result to a formation of a business plan.
The reason why those starting a business need a plan are important is because a business plan is the roadmap, or a plan document, strategy paper created for a sole purpose to make a business successful. Too many a time a business plan carries a 3 – 5 years detailed plan on how the company would achieve success.
The fact of the matter is that business plan document is mostly needed by a lot of people but a business plan is not essentially needed to start a business, or neither is the plan an assurance for success of once business; on the other hand, it is important to have a guard that is something that have the detailed plan in other to bring to your understanding on what you are expected to do.
The fact is that a business plan compels upcoming entrepreneur to research the business area and understand the requirements before going into such business. If you believe you need a business plan, you should be aware that a great business plan includes the following broad areas;
Business plan should have an “Executive Summary”
Business plan should have a “Company Description”
Business plan should have a “Market Analysis”
Business plan should have an “Organization and Management”
Business plan should have a “Service or Product Line”
Business plan should have a “Marketing and Sales”
Business plan should have a “Funding Request”
Business plan should have a “Financial Projections”
Business plan should have an “Appendix”
Who Are Those That Needs Business Plan?
Remember when I said Business plan is not the reason why businesses succeed, believe me am not changing my words but you should know that you need a guard for any business you are going to otherwise you will go in blind and lose all believe me I know what am talking about. A business plan is a required document for any ventures that are to be created to make profits. In other word if you want to make gain and understand the way to minimize capital in your businesses you need a business plan at some point.
Those who need a business plan is for a Start-ups business; and that is for young entrepreneurs with fresh ideas and wanting to know how to start a business.
Those who need a business plan is a young companies; a young company that has already start up a business that is an already existing one and they are looking for a way to change things in the organizations or company.
Those who need a business plan is a old or young Contractors and contract seekers.
Those who need a business plan is a student with bright Idea, a generators seeking grants and in other to help funds to start their businesses.
Aim of Writing a Business Plan Before Doing Business
Let me be honest with you there are individuals and organizations with a different reasons why they are writing a business, but one main reason is make sure that business succeed.
Develop Ideas and Start-up Planning: In every business there is a seed and that seed grows into reality and in startup a business one need an idea, the truth is that ideas are the seeds of any businesses and it shows how any organizations or company are developed. No matter how beautiful a business idea is if that idea is not developed and implemented the idea is of no use, it is has good as dead. One of the ways to develop the set idea is make a business plan.
How it works is making sure your ideas are well documented that means transporting that flash and brilliant idea into paper. With a step by step well documented plan you have a sharp plan and it’s more then what you need. When you don’t put your ideas into paper and making it a document is an idea in the head of a vague nature and but putting them to paper that you start to develop them and also get more ideas.
Its For Research Purposes: When someone is opting into a new business in an unknown area of business, it is important that he or she carryout a research in those area of business and when that is done the individual will then produce a complete document and that document is call a business plan.
Young and old business men and women should come up with an outstanding business plan in other to show the level of what is required more than ever when such person is going into a market, that include sales and financial projections. Because of the product aspect one most require to have an idea of what he/she is about to produce before even thinking of starting the business.
Business Evaluation, Expansion and Reorganization: In every business that will go through a lifetime, one will need to assess their existence, such as products, strategies and business models. In getting this done one cannot achieve this by just simply having board meetings with people and sharing ideas. It’s more than that because a required preparation of a document or it required a fresh business plan and well detailed to show about the new business model how they need to invest in.
For Grants and Fund Raising: One of the most difficult things in starting up a business has always been the ability to raise funds for the organizations. The reason is because big time investors and those with venture capitalists do not go about giving out monies just like that without first trying to know that they will make or yield profit in the nearest future. But those who would like to help such as a big time investor, or a corporate company such organizations like investment banks, that are design to help or improve small and media scale enterprises, will first ask for business plans or a proposal that will make you qualify for funding.
When they ask for a business plan here is one thing you should know, the business plan must be able to convince the investors that the business is workable, possible, can make profit, scalable, that the business can be sustained and add sustainable value to the investors. In the business plan there will be a place where you have to strongly convince them on how to get funding run the business to make profit either as a long team goal or a short team goal all should be figured out in your business plan.
Write a Business Plan
Let’s get something clear before we start looking into what it takes to write a business plan;
Do not try to do this by yourself because a business plan is better written by professionals those who are specialist in this area and such people are seen among the freelancers and business writers or consulting firms.
One thing you should know is that a blurred idea of a business is not good enough and it will not produce a practical business plan. You should need to put your geographical implications into consideration before starting a business. The truth of the matter is that it is not because a business works in the Canada or in the United State does not mean it will work in Nigeria, or it is not because a business work in Lagos doesn’t mean it will work in Kano; the first is that countries have a differ on so many fronts, as well as the state although but are in Nigeria but ethnicity matters.
Before going into a business one thing is sure there should be a detailed research is on the business. You must ensure you have a full understanding of every sector of the business you desire to go into.
Compositions of a business plan
I have tried to list every one of them earlier with little explanation but in this section I will go into it and try to discuss it in detail so that you should know what they involve and why they are important for your documentation.
Executive Summary: This is the brief of the entire document and that is what one is expected to see in your business and in the full document. This should be seen as the most significant document especially for those seeking funding or wanting investors. This document helps an investor, and provides them with a concise idea of whether the business idea is workable or they are wasting their resources.
This next part of the document it is good you write last this is after the whole document is written but as you write it let it be the first part to include in the document. The following should be including in your Executive Summary
The Mission Statement: This part of the document tries its best to elucidate what and what your business is all about and it should contain various sentences but be limited to a paragraph.
Company Information: This part of the document covers a short detail about the company, the date the company is been founded or established, it carries the name of founder and co founders, what and what is their roles, employees if any and the business location.
Highlight of growth: In this part of the document you should give or provide an example of the company’s growth; also the market and financial highlights should as well be included.
Products/Services: This area of the document, you should notify the brief of your products and services, which are those things you offer.
Financial Information: As a business looking for funding from other investment, it is important you indicate your current investors, your loans your profit and lost including your current bank and past investors.
Future Plans: This area is where you give a well explanation of where and how you want to take the company to in the nearest future.
For start-ups business or a new businesses, there is no way you will have those outstanding information that an already established company has, because you are starting up the business it is better to also including the detail of some background information about yourself, which will also include your ideas, the products and services you are about to offer. When doing this you have to prove and show that you have made a lot of research about the market and the sector you are about going into, give a with strong points that you can succeed in it and show how you can do it.
In the Executive Summary part of the document that is where you should prove whether an investor will want to keep reading your business plan or drop it into the trash, so make every word count. It is advisable to include the above information all in one page.
Company Description: This area of the business plan describes and gives a review of the different system of your business. With this area investor now have the idea of your business is; it shows them the goal and proposition of your company.
Here Are What to Include;
Some of this to include while writing is the kind of business you are doing and what are the market needs is your target.
You will still need to try and give explanation on how your products intend to meet the need you listed.
You should also ensure to provide the list of your consumers, businesses and organizations for an already working business but for a start up business you also need to show them the list of your prospective client that your company will serves.
Try and list, Identify and show your competitive advantage as a business such as the location, personnel, operations and bringing value to customers.
Market Analysis: If you take out time to make a research of the business before you enter anyone, this is where those research you do now come in handy here is the important of that research. At this part of the business plan you need to establish and show that you have the idea and the market industrial knowledge of the business with other findings and conclusions.
Some Things of What to Include
Description of Industry and Outlook: When writing this part what you should do is to describe the industry you are going into and when do it, it will include; company’s size, the historic growth, the trends and also the characteristics such as lifecycle stage, projected growth, etc. Ensure you identify all the major customer groups in the industry.
Information about target market: When writing this part it is of a great advice that you narrow your market size, it is important. Because too many businesses try to make it big and that is their mistake when they try to appeal to too many targets markets. Here are something you need to put into consideration and you should try and discover the following; what and what is the essential need of your customers or client? In your business idea and business plan are you meeting those needs? What are their are located? You need to ask yourself this, is your business a seasonal once or is it periodic purchases that will affect your business? Answer those question very well.
Size of the Primary Target Market: In this you will need to include then size of your potential market and their annual purchases that they offer to the industry. You will also find out the forecasted growth of the market.
Your Potential Market Share: Here in this part of the document is where the percentage of the market you think your business is going to you can obtain from a particular location and area? You will need to explain the reason behind your calculations.
Competitive Analysis: When you are writing this part you need to based your analysis to identify your competition based product, service and the way your market segment and which include; the market share, the business strengths and its weaknesses, how significant your market is to your competitors, specify if there is any impediment that could hinder you, when you are stating your case state the window of opportunity to enter, are there indirect or secondary challengers that may one way or other impact your success, what barriers are there for the market (e.g. evolving technology, high investment costs, lack of skilled personnel)?
Regulatory Restrictions: As you write out this part all you need to do is to include any customer, client or governmental requirements that may affect your business and show how you will comply with them. All you should do is to also identify the cost implications it will have on your operations.
Organization and Management
This part of the business plan you should have to illustrate the complete organizational structure of your company in details, the details of company ownership, and also the profiles of your management team if you have one and the qualifications of your board of directors if there is any.
Also you should have to go further to explain the duties of each person and including the details of each of the department and also those responsible for the running of it. If the company is been run by one to two persons all those information regarding the department and all that seem unnecessary but it is important to know that you should list the people running the business and show their capability.
But one thing you should know is that there is a need to give detail of whom is your board of directors, how they are chosen and you have to tell how you propose to keep all of them there. If they are on salary show the details of every one of their salaries, and how you are promoting them if there is a place for it, etc. You have to convince you investors that you just don’t have names on letterheads but there is real staff, which is you have to show the activities in the company.
Product and Service
After you have written the Organization and Management area of your company next item to you are to include in your business plan would be you describing your product and the services you will be offering or that you are offering. Here you also share the aspect how your product and services will meet your customer because your readers or investors need to be convinced.
Here are what to include;
While writing you business plan you should need to describe of your product very well; give a physical description and otherwise, indicate the benefit to your customers, the advantage of your product has over any other company that is in the competition with yours; and the stage of your product’s development.
If you produce goods here is where you need to show in detail your product’s life cycle and indicate any other factors that may affect it.
If there is any problem of intellectual property rights and copyrights or trade mark secret should be described concerning your products. The legal agreements and also backing should be revealed in your business plan.
You still need to revealed the Research and Development activities that are being carried about your product. Every research that has been carried out for your product should be involve and how it affects the industry.
Marketing and Sales Management
This aspect will be the one that will determine if you that you open will go a long way either in next one year or longer or maybe shorter. Someone said customers are your employers that is true because they are the lifeblood of any business and for that you can alone reach them if a good marketing and sales is done that is the only will you be able to reach them.
Marketing is not attached to one rule of a strategy adoption but it is rather it is very peculiar to each business based on the evaluations and business model development. To make sure you shine your approach can be unique to your business alone, on the other hand, there are overall in marketing strategies and if you should know they include the following;
For marketing skills you should have to make Marketing Penetration Strategy; this process is shows how do you should disrupt or enter and existing market.
A Growth Strategy; this area of business plan has to do with the training of staff, making of franchising and acquisitions, make a joint ventures, providing a products to different customers or client and changing your distribution chain.
Channels of Distribution; in this area of business plan the original equipment manufacturers (OEMs), also the internal sales force, distributors and retailers.
Communication Strategy; this aspect is how you expect to reach out to your potential customers; make promotions, arrange advertisement, public relations, personal selling, branded materials, brochures, flyers, social media, bill board etc.
How do you plan to sell your product; this is the next after all the proper marketing strategy.
Sales Force Strategy; here are some training that is needed for you business such as the internal sales agents, external ones, independent sellers, etc. this trainings are aim to give your team ideas on how do your recruitment. Don’t forget remuneration plans.
Actual Sales Activities: You need to know how you plan to carry out your sales strategy into activities so it is important to break them down. In doing so it involve, the identification of a potential customers, the opt for one with a highest leads to make a sale, show how you can contact to them and the make regular calls or send regular emails. You should try to consider cost when they are doing well.
The Funding Request
This area of this business plan is for those who is for business that are requesting funding or for those seeking for any form of grants or sponsorships. The below information should be included;
The current financial requirement of your business or company.
If there will be any potential requirements, you will need to utter it as well.
In your business plan you will need to indicate you propose to use the money that will be given to you. Tell if it will be for a capital expenditure, or working capital; are you going to use it for debt servicing? Is it for acquisitions? Or expansion and many more? All this needs to be listed this section.
You should have to clearly state every other financial issues and circumstances as well, example: buyout of business, acquisition, debt repayment plan, selling of business, etc. Your creditors or investors or any financial body that want to loan you money or be part of the business they all need to know this since they will be impactful on repaying your loans.
I need you to know that at the time when you are asking financial support, or grant and funding, loan one thing is important you do, you need to include the amount you want both the money you need now or in the future, and tell the period that it will cover, the guidelines or repayment plan if it is a loan.
The way you develop this segment is important that is why you should be careful to predictable analyze your market with set objectives. This will help you assign effective resources. The below key words are important and you need to know it as you are writing your business plan.
Historical Financial Data: If your business has been in full operation for some years now, any creditors or any potential investors will ask to see your past financial statements as in detailed. This Items included the cover income statements of your business, the expenditures, your balance sheets, the cash flow statements for every each of you existence business. At time they do ask for 3 to 5 years depending on how long your business has been in operation. In some cases your creditors can also request for any collateral if you want to insure the loan and this is regardless of your stage in business.
Prospective Financial Data: Here is some fact whether you are a start-up a business or you are running an already existed business, investors will require that you provide your financial projections for your business based on market findings and analysis. Such documents which can cover up to 5 years will include, income statements, balance sheets, cash follow statements, capital expenditure budgets, etc.
You can start showing your financial capital starting from the monthly projection of the first year, and then you can now move it to first quarter that is quarterly down to the entire year. From the first year it can then be extended to 2nd year or 5th year depending on request. The fund you are requesting for should be consistent to your projection it has to be like that because it is very important; If you made a mistake by not making it consistent it will look like if you do not know your numbers or it might be misconstrued that you lack integrity and your creditors won’t trust you or ever want to do business for you again. If you carry out a brief analysis of your financial information it could become an advantage to you more than ever when done with images like graphs.
This aspect is not from a business plan but you may ask to provide as a request basis. These plan stands as a tool that will help you communicate your ideas and business situation to people or company so that they all may see it. You should know that not every information everyone should see but on the part of creditors, because they want to make a funding decision regarding your business they feel safer asking for such documents. These documents stand as a proof and verification means that the information you have provided in the body of your business plan.
The appendix will include the following;
Your business or company’s Credit History (personal and business)
Your business or company’s Resumes of key managers.
Your business or company’s Product pictures.
Your business or company’s Letters of reference.
Your business or company’s Details of Market studies.
Your business or company’s Relevant references from magazines and book references.
Your business or company’s Licenses, permits, patents and copyrights,
Your business or company’s Legal documents.
Your business or company’s Lease copies
Your business or company’s Building permits.
Your business or company’s List of business consultants, including attorney and accountant.
It is advisable that the copies of businesses plans should be kept and their distribution also monitored if there a projector yes put it there on the screen let everyone see it. When there is an update it will make you aware of it for specific audience or purposes.
There are some expect who believe that there should be a design as it is just like in construction, but they said it is on a rare cases and it should have a plans to follow, because the fact is that any business or company that may involve a lot of activities should equally need a complete plan in addition they said not always. When you have a business plan for your business or company and you take out time to carry out appropriate research about the market, the industry, the competitions, as well as trends helps you to have a blueprint on what you can work with. When a thorough analysis development plan is done, It helps reduces your risk factor for business failure, it help you predict the market and also give you control.
With you having a business plan, it can help you keep track of your journey in the business, helps you make an improvement, guard you where you can go in the future and most importantly how you be determined to achieve them. Don’t just sit and have goals but long and short team how to make a millionaire naira; there should be a way or a plan on how you can attain it.
When you refuse to make a good business plan, you are also planning and that is you are planning that your business to fail. So you need a business plan