Business Plan

When Do Businesses Need Business Plans In India?

When Do Businesses Need Business Plans In India?

India has the 3rd largest ecosystem for start-ups. The increase in start-ups has led to an increase in the need for business plans in India. A business plan is considered a reflection of the business and acts as a guiding light for every stage of the business, straight from starting the business to the day-to-day activities of the business. However, there are certain circumstances where businesses need Business Plans in India.

The article discusses the situations when a business needs Business Plan in India to help the organisation prepare the business plans, which can become helpful as and when it is needed by the organisation.

What is a Business Plan?

A business plan is a document which provides the objectives and goals of the business along with the measures that the business intends to take in order to achieve those objectives.

When do Businesses Need Business Plans in India?

Businesses need Business Plans while –

Ascertaining the Financial Needs of the Business

One of the most common situations, when Businesses need a Business Plan in India is when it wants to determine the business’s financial needs. The ascertainment of the financial needs helps the businesses to determine the amount of funding it requires from banks or other financial institutions for which it analyses the financial resources present in the business.

Obtaining Financial Assistance from Banks 

Once the businesses have ascertained their financial requirements, it needs the business plan to obtain the required financial assistance from the banks or other financial institutions. It provides information on the current financial resources of the business along with the amount of funding it requires to carry out its operations smoothly.

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Preparing the Plan to Attract Investors

Another situation when Businesses need a Business plan is when it needs to create a plan to attract investors. Such plan must be drafted in such a manner which answers the relevant questions that can be put forth by the investors, such as the description of the products and services of the business, the raw material or the machinery used in the manufacturing process, financial projections, marketing strategy or any other relevant information which can be important for the investor The businesses must analysis the business plan from their end before presenting it to the investors.

Providing the Description of the Business

The description of the business plays a vital role in the reputation of the business in the market. Businesses need a business plan when it wants to provide a description of the business to the internal management as well as the outside world. The business description also helps in a better understanding of the functioning and the nature of the business.

Conducting a Market Research

A business plan is needed whenever the business wants to conduct market research. It consists of all the key information about the products and services of the business, the financial resources of the business, competitors and much more, which enable the business to conduct market research on the basis of certain essential factors such as the recent trends in the industry, major threats in the industry, the current situation of the market, details of the target market of the product and services of the business etc. and have a thorough understanding of the marketplace and industry.

Making the Marketing Strategy

After conducting thorough market research with the help of the business plan, the same can be further used to prepare a marketing strategy for the business. The marketing strategy includes the price of the products/ services, strategy to promote and sell the products and services of the business, the method of reaching out to the customers, plans to retain the existing customers, and the advertising budget. The marketing strategy must be revised each year which can be facilitated through a business plan

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Determining the gaps in the Business Strategy

The business needs Business Plans in India in order to determine the gaps in the business strategies. The plan enumerates the business strategy, and in case the business is unable to achieve its goals of the business, such plan can be used to compare the business strategies mentioned in the plan with the actual results to determine the gaps or success of the plan.

Devising a Plan of Action

A business plan is also needed when the business wants to devise an action plan to fill in the gaps in the strategy of the business.  Such plan must be well drafted to help the business have detailed information about each aspect of the plan to devise the best plan of action that can facilitate the growth of the business.

Describing the Revenue Model

Businesses need business plans in India when it wants to describe the revenue model of the business. A revenue Model[1] describes the ways in which the current business can generate revenue for the company, and a well-drafted business model helps to describe the same effectively to the stakeholders or any other party.

Looking for New Opportunities

The business also feels the need for a business plan in case the business is looking for new opportunities.  It can facilitate the business to ascertain the strengths of the company and the recent trends in the market through the market research section of the business plan and grab the best opportunities as per the needs of the business.

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Analysing the Risk Involved in the New Opportunities

Along with looking for better opportunities, the Business needs a Business plan in India to analyse the risks involved in the new opportunities to avoid grabbing the wrong opportunity. The risk can be analysed by comparing the available resources within the business and the resources required for grabbing the opportunities. It can also help minimize the opportunity cost and compare a particular opportunity with another opportunity.

Recruiting Staff for the Organisation

Employees are considered the best asset of a business, so it is important to hire the best staff for the business. It is needed to assess the staffing needs of the business. It helps the business to recruit the staff as per the nature of the business. The business plans also help the employees to have an overview of the business and make an informed decision about being a part of that particular business.

Ascertaining the position of the Business in the Market

A business plan is also needed when businesses want to know their position in the market. It reflects the performance of the business, which enables the business to check if the business has made a profit in the particular financial year or not. This can be analysed by reviewing the financial documents and projections mentioned in the business plan. 

What are the Major Elements of a Business Plan?

The major elements of a business plan are-

Executive summary, which provides an overview of the whole business plan

Description of the company, which provides information about the type of customers the company, intends to serve along with the competitive advantages of the company.

Market Analysis that enumerates the research on the recent trends in the market  

Organisation and management where the company mentions the organisational structure of the company, the nature of the company such as private limited public limited or LLC, along with the employees of the company

Product and Services is the section where the company provides information about the products or services provided by the company.

Financial Projections are the section where the company enumerates the financial statistics of the company, like the cash flow statement, profit and loss statements, balance sheet etc.

Conclusion

There are various circumstances where a business needs business plans in India. Therefore it is important to ensure that the same is prepared effectively to guide the organisation in each step and to facilitate the growth of the business.

Read Our Article: Different Types of Business Plans for a Start-up

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