The decade of 2020 in Nepal ended up with a huge wave of people returning from abroad with innovative ideas. With that happening, there was an influx of startups, and with the startups, came a rush of new business proposals and plans. Despite this, we see only a few startups succeeding. Why did a lot of startups fail to last though?
There are a lot of varied reasons for their failure. Some failed because they did not have enough money, others because their idea was not practical while a few failed because they lacked a good Business Development Plan (BDP). Although BDP is not the top priority when starting a company, the failure to make a good BDP is one of the most common reasons why startups fail.
We will focus on creating an effective BDP because many people don’t know how to make a good one. The good news is that the process of making a BDP can be segmented into steps, and be made easier to understand.
Step 1 – Write an executive summary
An executive summary is basically the summary of your whole BDP. This is essentially the part where you establish the first impression of your BDP so be sure to include the whole summary of your BDP in the first sentence itself. The first sentence should include at the very least these 9 things:
- Your Business Name and address
- The legal status of your business and contact information
- The long term and short term visions of your company
- How you will achieve your vision and smaller missions of your company
- The ultimate goal of your company
- The core values that you hold at your company
- The tagline of your company
- Your financial planning in brief
- The marketing strategy of your company in brief
Admittedly this is going to be a long sentence but since most investors don’t really read the rest of the executive summary, this is one of the most important sentences. The rest of the executive summary is all about explaining the first sentence in a brief.
Step 2 – Company Analysis
You have laid out the whole plan of your company in short during the previous step. Now it is time to analyze your company. This is what SWOT analysis means and functions as. As you may have guessed SWOT analysis is an acronym for Strength, Weakness, Opportunities, and Threat analysis.
- The S in the SWOT analysis stands for Strength of your company. As the name suggests it is analyzing the good aspects of your company and the strengths that your company has that will help it thrive in the future.
- Opposite to S, the W in the SWOT analysis stands for Weakness of your company. As you may have guessed, this is the analysis of the things in your company that can drag it down.
- The O in SWOT analysis stands for Opportunity and this is the analysis of the possible opportunities that you can reap benefits of or the opportunities that you can create for your company.
- Meanwhile, T is the complete opposite of the O and stands for Threat analysis. This is the analysis of the possible or existing threats in your company or the threats that can arise in your company with the potential to ruin your company.
While this may seem a bit overboard while looking from the eyes of a commoner, if you are going to do a business this is a mandatory thing and no BDP is complete without a company analysis or SWOT analysis.
Step 3 – Industry analysis
The next logical step after a SWOT analysis is naturally to analyze the Industry that your company will be competing within. However since the industry is much bigger than your company, this needs to be done in two steps. The first is to analyze your rivals and the second is to analyze the external things that can affect your company besides your rivals.
1. Rival Analysis
As the name suggests, in this step you simply analyze your rivals. To do this well, you have to study your rival companies in detail. This includes everything from their business plan, their strengths, weaknesses to their marketing strategy. However, the good thing about doing all of this is that not only will you be able to plan how to survive in the market with those rivals but also how to out-compete them.
2. PESTLE analysis
In this phase of the BDP, you will have to analyze 6 components of the world that affect the industry and as a result your business in a severe way. and each of those components is represented by the letter in the name. While analyzing these components you have to take a note that you cannot take control of any of these factors and the best you can do is adapt to the changes. The components of this analysis are:
In order to make a good BDP, you need to analyze how each of these factors affects your business and how you can either take advantage of or at the very least avoid running into the issues because of these factors.
Step 4 – Products and Services
This is the part of your BDP where you define what you offer. You define what you are going to sell to the public, be it physical tangible products, intangible but usable products, or services through different means. This entire thing is done to prevent your consumers from getting confused with similar products or to just describe how different your products are.
Along with this you also have to show what resources you have at your disposal and how you use these resources to provide the people with your products and services. Now one thing that has to be noted is the different resources at your disposal which are generally Human resources, raw materials, machinery, and location. Let’s describe them in brief to avoid any confusion.
- Human resource is basically all the skilled manpower or employees that one has at their office. This resource is the main workforce behind the product or service.
- Raw materials are in short, the tangible materials that are the source and base form of your products or used as a core ingredient while providing the service to the consumers.
- Machines and equipment are the machinery and technologies that your company uses to make the products and provides the major aid while giving the services.
- A location is a form of intangible resource. If you manage to secure a good location for your business, then there is almost a certainty that your business will be better than the competitors with the same capabilities as yours located at a bad location. You do have to analyze the best locations for your business beforehand though.
Before you make any plans to market your products/services or even begin to plan how to operate your company, you have to know the components of a market first. You then develop a set of actions to promote your products and your company. This is basically what a Marketing mix and it is also known as the 7P’s of marketing among marketing students. Now let’s see what the 7 P’s are shall we?
- Product of the company
- Price of the product
- Promotion strategy on a basic level
- Place of distribution
- People involved and Public relation of the company
- Process of manufacture
- Physical evidence of the company
Once all of these steps are defined in your BDP, you will be able to think about how your company will run. Your mind will most likely have started to think about how to operate your company based on the things that you have planned so far after you analyze and define all of these.
Step 5 – Operational Plan
By this point, you will have already planned about how to source your raw materials, how to create your product or services, and whom to employ. You will already have analyzed all the factors that can affect the future of the company. Now is the time to make a plan on how to operate the company. While making the operation plan for your BDP, you should answer the following questions.
- Where will be your main base of operation be?
- How will you manage the infrastructure of operations?
- What will be the work schedules?
- How will you produce your product or give the services?
- What are the skills required to deliver your products and services?
- How will you distribute your products?
- How much money will you spend?
One side note is that while making the operation plan, start slow. Start with the plan to run the company with relatively low funds and low human resources. Along with this, it will be better if you make this plan for around 5 years into the future. Even if you can’t plan that far ahead, make an operational plan for the next 3 years if you want to attract good investors. In this case, it’s better safe than sorry
Step 6 – Marketing Plan
Among all of the plans that we have talked about so far, this might as well be the plan where the fun lies. The reason for that is, not only do you get the chance to do the market study to roam around in the market, but also to read and visit the sites that you love the most. But the thing is if we try to explain this whole step in one chunk it will be very difficult to understand. So let’s break it down into two parts.
1. STP (Segmentation, Targeting, Positioning)
The name defines the process itself. In this part of making the Marketing Plan, what you do is divide all of the people your business will affect into three parts.
- The ones who are the direct consumers of your products
- The ones who are potential consumers of your products
- The ones who are not your consumers
After dividing the people and planning what type of group to target i.e finding your direct consumers – who can also be called your “target audience”, you now have to make a plan where to position yourself among your target audience. All you have to do while positioning your company is ask yourself “How do you want to make yourself stand out of the crowd”. Admittedly this is not an easy task and it can take a long time to come up with a good idea but don’t hurry as this is the step that will define whether you will stand out or get lost in the crowd.
Branding in itself is a wide term and we cannot include everything about it here but we will be covering “Branding” in detail some other time. However, we will cover the basics here.
To start with Branding in simple terms is creating a unique name and image of your business to make it memorable. This includes everything from how you write your content to how your advertisements look and even small details like your Logo and the colors you use.
Apart from these things, how you market yourself is also included in branding. In this phase of the BDP, you plan your entire outlook.
Also keep in mind that besides the quality and reliability of your products and services, this is one of the most important parts of your company. Sometimes even if the product is not of top quality, as long as it has a good brand behind it, the product will sell well. So be careful while making a brand for yourself.
Step 7 – Management Team
This the step where you decide who the management teams in your company will be. How you will plan the placement of the management team will be a major deciding factor in the success and failure of the company. That is all there is to this step but there are a few things that you should note down.
- It is better to have a chain of command where the ones with more authority have more responsibility and the ones with less authority have less responsibility.
- Put the right man for the right job while planning a management team.
- Communication is the key here so anyone above the basic level must be good at communication.
Needless to say, there are many types of plans and formats for organizing the management team but it all boils down to how well you make the best of your available human resources and how you select each member of the managerial team.
Step 8 – Financial plan
After everything has been said and done, it all comes down to money. By this point, you have made a plan for pretty much everything with the exception of an exit strategy. Then again exit strategy is your next step so for now trhe focus will be on the money.
You have to plan how to spend each coin carefully and this is the part where you plan for the expenditure and income of your business. Although you do have to consider every part of the business that requires money, it can still be divided into two major chunks.
1. Investment Plan
This is the chunk where you plan the amount of money you invest in each part of your business. Every expenditure, starting from the money you spend as an investment in your fixed assets to the money you spend on small things like a hairpin comes under the investment plan. After all, you only have so much money before you run out of it.
After making a plan on how to spend all the money that you have, make a plan on how to earn back all those expenses. This is the part that will stress you out a bit. The reason being you can predict how you will spend the money but there is no way to predict how the income will be generated. The best you can do is try and guess as the future is uncertain. However, even a guess is better than nothing.
Since this is the part of the BDP which is entirely concerned with money and accounting details, it can often be hard for quite a few people to plan. In that case, be sure to work with someone whom you trust as money can make people blind at times.
Step 9 – Exit strategy
What if your business doesn’t work out in the way you plan? What do you want to do at the end of your business’s life so that you can reduce loss? These are basically the questions that you should ask when making an exit strategy. As the name suggests exit strategy is a contingency plan- in case you have to sell your business or the business goes into a loss.
One thing that has to be noted is that you don’t always sell your business when it is in a bad state as many people think. People also sell their business when they have to move to somewhere remote or when they start a better business and the old business gets useless. Either way, you need to be prepared for all of these cases that await you at the end of your business career, and for that, you need an exit strategy.
Final thoughts and side notes
BDP in itself is a huge term and what we are doing here is just scratching the surface. The process mentioned here is a breakdown to make writing a BDP simple.
On a side note, take things lightly. Make a plan in your mind first and jolt all of them down. After that use the BDP templates and the steps mentioned here as a reference to check what you have missed in your plan and revise it. That way you will have a lot less pressure in your head.
Making a Business Development Plan (BDP) is one thing but what about the process of starting a business? Don’t worry as we have got you covered in this area as well. Just check out our step-by-step guide for starting a new business if you want tips for this matter and if you are a student who is just learning about business, you might also like our list of 9 Most Important Apps for Business Students.