As an entrepreneur, you need a business plan, no matter if you start your own business, or look for investors to boost an existing one. Making a business plan correctly, without any unfortunate mistakes, is a skill worth mastering.
What is a business plan?
A business plan is a detailed project of your business. This is a kind of presentation of all the aspects, characteristics and nuances of it. Such a plan takes into account everything necessary for the launch, gives financial calculations, describes the strengths and weaknesses of the product, includes the costs and revenues. Also, the business plan estimates the budget and specifies the legal form of the company.
The purpose of business plans
The purpose of business planning can be detailed this way:
- identifying all the advantages of the company and its weaknesses;
- determining the level of sustainability and viability of the enterprise;
- concretization of the development strategy;
- lowering the risks for you and investors alike.
It should be noted that the creation of a business plan of your enterprise will not only help to determine what is profitable to sell, but also to understand what should be the expected amount of profit from the realization of the idea. The business plan will also reveal the possibility of expanding the scope of services in the future, and will aid with finding sources of financing for the project.
Writing a business plan
Many entrepreneurs do not think about how to make a business plan, and simply buy one made by specialists. Yet it is still recommended to write it yourself, as this process contributes to a deep study of the market and competitors: you can get additional information and experience, that is, more deeply familiarize yourself with the direction of your business.
On the cover page you need to specify the name of the organization and the information about its owner. Also, specify who the developer of the plan is, the amount of investment needed, etc.
A business plan usually consists of the following items:
- project summary;
- description of the company and the product (service);
- production and marketing plans;
- organizational plan;
- financial plan;
- risk assessment;
- appendices;
- conclusions.
1. The summary should briefly describe the market, the company and the product. The length of the summary should not exceed 1-2 pages.
The following information should be included:
- competitive advantages;
- the required amount of investment;
- planned sales revenue for a specific period;
- profit guarantees;
- promotion strategy;
- payback period, etc.
(Source)
The summary should be written last. Still, place it in the first chapter.
2. In the description of the company it is necessary to define its mission and goals, name the founder. It should also note:
- the history (origins) of the product or service;
- the pace of market development;
- the organizational structure of the company and its place in the market (existing or planned);
- main competitors and their products.
At this point, you can not do without a SWOT-analysis of the company. It indicates all the advantages and disadvantages, development options and risks.
3. In the paragraph describing the products it is necessary to provide each with:
- name;
- photo or sketch;
- product characteristics;
- conditions of its use, etc.
The stage of product development should be noted. If it already exists, the demonstration is mandatory.
4. The marketing plan is a very important point, because you need to have a sales strategy. Include these points to the marketing plan:
- the implementer of the product (manufacturer, store, institution, etc.);
- target audience;
- planned sales volume;
- pricing, etc.
It should also indicate the budget for advertising: ways of calculating it, the monthly cost of promotion, and means of tracking the effectiveness of promotional activities.
5. In the organizational plan, note the form of ownership and location of the company (facilities, warehouses, offices, sales outlets). The company’s executives, specialists and investors, as well as the forms of interaction between them have to be specified here. Also, don’t forget about the timeframe of the implementation.
6. Creating a financial plan is a very painstaking and complex task. Here, income and expenses are specified, the subtleties of taxation are taken into account, and the potential profit is determined.
This section of the business plan consists of two parts: income and expenses. In the income part, you calculate the potential net profit, taking into account the realities of the market and the peculiarities of your business. In the expenditure part, you specify one-time expenses during the opening phase, such as the cost of trade equipment and repairs to the premises. It also specifies fixed costs (taxes, payroll, rent, utilities).
(Source)
7. The appendices section usually contains all the necessary additions: graphs, tables, charts, schemes, sketches, etc. it is a technical part, but an important one nonetheless.
8. In the conclusions it is once again necessary to provide the business idea itself, the amount of investment required, the expected payback period, the forecast for profitability, the product and target audience, the time of launch. It is best to summarize the main points here to make the potential investor believe in the prospects of the project.
How to prepare a business plan yourself
Before you write a business plan, samples can be found on the Internet for any case. You can use an option for owners, partners, investors or a bank. Just take the structure of some business plan as a reference point for further actions – you’ll only have to add your data.
But first you need to generate a realistic business idea, and only then proceed to planning on paper. Special attention has to be paid to the section with financial planning. It is worth noting that the guarantees of return on investment is a very important thing for investors.
Writing tips
Your business plan should be concise and short. It must necessarily contain a sufficient number of facts confirmed by the sources cited. The points mentioned above should definitely be included, of course.
Do not overburden the document with unnecessary things. If you feel the need to describe any process in detail, you can put this information in an appendix.
Think about how to make the business plan easy to read. Format and edit the document properly. The formatting – font, headings, spacing, numbering, etc. – should be the same throughout the document, obviously. Numbering, headings, table of contents, naming tables and images, labeling of data on graphs are all very important elements.
Time should also be spent on preparing a decent presentation of the business plan. Don’t make your presentation longer than 12 minutes.
How to create a business plan and not make mistakes?
When writing a business plan, you need to understand exactly whom it is going to be pitched to. It would be a mistake to think that the plan for internal use will not differ in any way from the plan for investors. In the first case, you can skip proving some costs. For example, note that instead of buying a new laptop you will use your own. In the second case, you need to clearly justify all costs – the most important component of the plan for investors is its accuracy.
All other errors can be divided into 3 types:
- Conceptual: these happen due to the lack of experience in a particular business area or ignorance of existing technologies;
- Technical: lack of important information or its incorrect processing, use of unverified data, errors in calculations;
- Methodical: lack of specifics on investments, denial of risks, lack of professionalism, shifting the issues of finding all the necessary capital to investors.
Conclusion
Now you know what a business plan consists of, so you can create one yourself. Just remember: competent development of a business plan is the key to the success of your business. From crafting to electronic repair, everyone needs a good plan. Its proper presentation will help to assess the prospects, find a business partner and investors.
