Calling it a documentation makes it sound like a big deal. Simply put, you need to know how to write a good business plan in Nigeria.
Though the same principles applies even if your business would be situated anywhere else in the world. But because you want to start building your business here in Nigeria, this guide would reveal the simple to follow steps on how to build a business plan in Nigeria.
Before I get on with it, have you generated a viable business idea yet?
If you’re yet to do so, click on this elaborate article, and you’d find different ways of generating business ideas in Nigeria.
There is also a free infographics version of the article on how to start a business in Nigeria here.
Doing business successfully isn’t easy.
However, you can succeed and thrive if you start by planning everything properly.
And a very good way to plan properly – if not the best way, is to build a good business plan.
Whether your plan is for a big or small business, you need to have a plan clearly set out before you start anything.
You might be wondering, why do I need to write a good business plan in Nigeria for a small business?
Well, the point of building a business plan is to guide you to clearly communicate to your potential investors what your business opportunity is all about.
A well-built business plan serves as a guide through the stages of starting and managing a business. It can help you get funding, and bring in new investors who will feel safe that their money would not go down the drain.
A good business plan is a weapon you use to convince others that having dealings in your business is a smart choice.
Don’t be among the vast majority of Nigerian business people who only have a copy of their business plans in their head.
Because having a copy of your business plan only in your head is overtly unreliable.
However, there is no perfect blueprint for writing a good business plan, but once you integrate the basic elements of a good plan, it definitely turns out good – and perfect.
Actually, you don’t really need to employ the services of business plan writers in Nigeria, if you know, and have validated your business idea.
To build a perfect business plan, you simply have to focus on important points, keep it simple, and go straight to the facts.
However, there are very important elements, which must be contained in your business plan for it to truly be termed “a good business plan.”
These elements, which you must include for you to come out smiling with your copy of a good business plan in Nigeria are what bizintelng.com would elaborate below for you.
1 Executive summary
The executive summary is the most critical part of building your business plan. This is the first aspect of your business plan that anybody would see.
The executive summary is critical because it is a brief look at the key elements of the whole plan.
Your executive summary should contain your mission and vision statements, your goals for the business, your organizational structure, your strategy on how to run the business, and your financials and cash flow projections.
It paints the picture of your business at a glance.
For your executive summary to stand out and attract investors, Make sure it provides answers to these vital questions:
- What’s the business idea? On what merit(s) is your business idea based? No matter how well crafted and written, you’d not go far, or attract investors with a bad idea, meaning your idea has to be good.
- What problem does it solve? Your business idea should be a solution to a problem or need in the market. And this should be captured in the executive summary clearly.
- What is the cost, how much money is needed? Prospective investors want to be sure what they are throwing their money into. So your summary should be able to answer what you need the money for. Details at this point may not be necessary but be very explicit about the cost, what the fund is needed for and how the business stands to benefit.
- How would the business make money, or how does the investor benefit? You are seeking to get investors by building a business plan and one way to do that is showing the investor what he stands to gain and over what time should he expect returns on his investment.
Important things to note when considering investors, as described in this article are these:
- Friends and family want to get their money back someday but are not very interested in timing and returns.
- Bankers look for free cash flow to pay back the principal and interest of their loan. They also look closely at management experience and marketing. They may ask for collateral. By law they have to be conservative, that is, risk averse, so they are not great candidates for risky financing.
- Angel investors look for moderate rates of return, usually above the prime rate, plus some capital appreciation. They sometimes want to be involved at a hands-on level.
- Venture capitalists seek annual compound rates of return in the area of 35 to 50 percent per annum. They seldom want to go longer than three to five years to cash out. They always want to know what the exit strategy is.
Don’t forget yourself: You rarely find a company that doesn’t have any investment from the entrepreneur or entrepreneurs who started it.
Additional questions you may want to consider answered in your executive summary include:
- Who owns what?
- What is the team managing the business?
- What product or service will you be offering?
- What advantages do you have over other competitors?
- What is your market plan?
- Is there any exit strategy?
Ensure you create a compelling image of your business opportunity so that important people who see it would want to be a part of it.
The executive summary is a kind of an elevator pitch that you can use to engage anyone who is in a hurry.
It is advisable to write your business plan as at the end of compiling the whole plan.
2 The market opportunity
This is another basic element to consider when writing your business plan.
Part of what goes into dreaming up a business idea is the knowledge of a market available to you where you can push out your products and services. So this implies that you have a good understanding of the market.
This must be clearly articulated for you to have what can be seen as a good business plan.
It is pertinent to conduct a market research as part of developing a business plan.
The market research helps you confirm if indeed the problems you set out to solve actually exists, those affected and also helps you figure out how to best deliver the product or service and at what price.
In building your business plan you have to be clear on the opportunities available to you in the market you are venturing into. A good market research will help solve this issue.
In your market research, pay attention to these areas given below, they will help your business plan positively:
- The market size: You should know how big your target market is. Know the size of the population that need the product or service you are intending on providing. This helps you with a lot of other planning in the business, this is very vital.
- The market growth: This is another area that should be of interest to you. This precisely is the market opportunities referred to. What are the potentials of growth available in your prospective market? A good business plan should be able to answer this question in the affirmative. Your business plan will, of course, involve projections into the future at some point and getting that projection right begins from here.
- Market share: What share of the prospective market do you intend to secure for your business when you kick off and in the long run? Estimating what share of the market you intend to control when making plans for your business enables you to estimate your potential revenue.
3 Competitive Analysis
Whatever business you are delving into or starting up, falls into an existing industry. And every industry has its flaws, so also does every business idea, it is birthed as a result of a dissatisfaction of a service.
Like it is popularly said, knowing who you are going up against in a knife fight raises your odds at winning.
Realize that for every business you intend to set up, you are not the first, your product or service falls into an existing industry with players already.
It is, therefore, crucial to incorporate an in-depth analysis of the industry you are venturing into. Incorporate into your business plan the major players in the sector. Understand the happenings and rules obtainable in the industry. This, to a great length, butters up your business plan.
Do a thorough SWOT (Strength, Weakness, Opportunities, Threats) analysis of every single competitor and player in the industry.
- Strengths: What edge does your competitor have above you? In the sector you are delving into, there are businesses you admire and look up to, so why do you do that?
- Weakness: If you do not know your competitors’ weaknesses, not only will you be unable to exploit those weaknesses, you will not be able to provide solutions to the problems caused by those weaknesses.
- Opportunities: Opportunities abound daily for you as a business owner, so knowing your competitors well enough opens your eyes to see opportunities you can take advantage of from their actions and inactions. What opportunities are they not seeing or using? If you don’t find them you cannot use them.
- Threats: Are there any threats to your business success? You have the chance to nip those threats posed by competitors in the bud early enough.
The essence of including your competitors in building your business plan cannot be over emphasized.
A thorough understanding of your competitors enables you to think about how you can differentiate your business positively from the competitors in the market.
4 Marketing and Sales
At this stage, you have clearly defined your product and service, the problem in the market you want to solve and how, and also why your product and service should be preferred above others.
Now you need to now show what channel of advertising and sales you want to use to approach your prospective customers with.
You have to show which channel best suits your potential customers, considering which has the lowest customer acquisition cost. Your understanding of your potential customers would help you frame this appropriately.
You cannot, for instance, use online advertising to targets customers who are based in rural areas with little or no internet connection.
Most businesses pay little attention to this area to their detriment. Failing to advertise is like designing a good product and hiding it inside your house. Advertising is what helps you to showcase your products or services to people that can buy them, thereby bringing revenue and profit to your business.
This brings to mind why it is important to do on-ground validation when researching your market, as it would help determine the best channel to use in reaching your potential customers.
5 Management Team
Writing a good business plan in Nigeria involve showing who handles what in the business.
Here you describe the management team of your business and other key people attached to your business.
For instance board of directors, managers and so on. A prospective investor is mostly interested in the specific industry expertise or skills you have that can drive your business.
This means you should be able to show your that your management team is strong. This means the team should be diversified as this would help in critical decisions making, ensuring every member views issues from various perspectives, which will lead to a balanced management team.
How then do you build the right management team?
The question is not whether you need a business team; the real question is how to build the right team.
The first step to building the right business team is being sincere about the skill set you lack as a person and this is the most important step. Be honest in assessing yourself. Look at the SWOT analysis of your business with an emphasis on your weaknesses in terms of skills to run the business. It will be a failure from the onset if you are not sincere about this assessment.
Be frank about it. What skills do I need that I do not have? The answer to this question will help you pick out the roles you want to fill and the skills you must bring onboard.
Secondly, in building your business team, ensure to find people who believe in your idea.
You may get the very best of professionals and experienced hands onboard, but if they do not believe in your idea in the first place, it would be the easiest way of starting your business the wrong way.
This is a good reason why you have to be clear and concise when building your business plan as pointed out earlier. This would help everyone you are bringing onboard the team at this point to understand the goal and it would be easier to know if they believe in the idea or not because it should be clear enough.
Another step to building a great business team is to maintain clear boundaries with familiars.
This may sound simple but most entrepreneurs get it wrong here when building their business team. Avoid mixing friendships and business.
When you have put this team together, it is then vital to communicate this when writing your business plan as your potential investors and customers would want to know who they are dealing with.
6 Financial Cash flow projection
Also vital in writing your business plan is the Financial Cash flow projections. This is one very important aspect your potential investors would want to see.
Your financial plan should include a historical and forecasted income statement.
A cash flow forecast is simply an estimate of the amount of money you expect to flow in and out of the business, including all projected income and expense covering a period of time.
Why is the cash flow vital to a business plan?
- It provides an indicator for financial stability or instability.
- The cash flow projection ensures you do not run short of cash for business to run efficiently.
- It helps the organization maintain a good credit history because they are able to handle financial obligations in a timely manner.
In talking about your financials, you have to include your forecasted revenue and cash flow. In the nearest future, say five years where will your financials be?
Give your potential investors a feeling of why they should invest in your business.
Your cash flow consists of your potential expenditure and revenue over the next few years.
There are several business plan templates available that can help you prepare your cash flow. A potential investor would want to assess the risk of investing in your business as against the returns he would get in relation to other investments opportunities.
Lastly, potential investors at this point would want to know how much funds you need and for what purpose you plan to spend it. So your financials have to add up.
These elements should give you a good insight into what writing a business plan is and the things to consider for writing a good business plan.
These elements are vital to any successful business plan. It is a huge error to play down the importance of writing a business plan as an entrepreneur. This is because a solid business plan serves as your compass to a successful business.
A good business plan should be convincing, you have to make a point and genuine case for why your business idea is good enough, a reason why you should give your all into writing the plan.
Now that you are armed with the necessary elements and tools for writing a good business plan, why do you need a business plan? Do not forget that having a well tailored business plan is quintessential to a successful business.
Why do you need a good business plan in Nigeria?
- Source of funding: A well-tailored business plan can be a source of generating funds for the business. Having a well-written business plan can help your case for sourcing fund for the business. Your cash flow projections, for instance, show the viability of the business and how you intend to achieve that. This can convince even your bankers a great deal in the event you want to access a credit facility.
- To attract potential investors: Venture capitalists for instance generally want to see a detailed business plan to enable them to evaluate your business before making the decision to invest. So a good business plan makes your job easy.
- Good partnership ventures: As an entrepreneur, never forget that at some point in your business journey, you will need to go into partnerships to expand your business. No business would want to partner with a potential failure. In some cases, even as a startup, a good business plan can get you very good partnership deals that shoot your business to unprecedented heights in a short time.
The bad news is, most business owners are lazy and reluctant to write a business plan for their businesses.
Don’t be like them.
At Bizintelng.com, we love helping people to start, manage and grow their businesses.
Having a challenge writing your business plan?
We’d be glad to help you out. For a start, download our free ebook on how to start a business in Nigeria.
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