The business plan is the starting point of a new company, a management tool to plan business initiatives. It helps the entrepreneur gauge whether his idea is viable, whether it’s a new business, a product launch, or an expansion of an existing business. Read to the end and learn what a business plan is and what aspects are included in it.
In practice, a business plan is like a report that contains all the essential information for the start-up of the business. It must indicate the path to follow, from the idea to the achievement of the objectives set.
What is a business plan and what are its parts?
The business plan must show everything necessary to start the business, considering all the areas of the company involved, such as financial, marketing and legal.
Business plans usually include market research , the definition of the target audience and the best marketing strategies to reach the public or the consumer, contracting estimates and forecasts of income and expenses, for example. It is also important to indicate the weak and strong points of the company to anticipate possible problems.
The business plan may be required by some investors or banking institutions to offer financing. In any case, the preparation of a business plan is essential for the entrepreneur who wants to take his steps with greater confidence.
how to make a business plan?
Now that you know what a business plan is for, you should know that there is no single business plan methodology or model . Planning will always depend on the type of activity and the size and complexity of the company. The business plan of a small cafeteria, for example, will be much simpler than that of a large industry.
Therefore, the following steps are just an example of a business plan. The steps can be adapted according to the needs. The idea is that, at the end of the business plan, the entrepreneur is convinced of its viability, prepared to face possible problems in the future and to attract investors.
1. Present the idea
After reading what a business plan is, you should have already imagined your business idea. Briefly describe your business concept and present the CVs of the partners involved in the project.
2. Present the market
Start by doing a sector analysis , presenting data on the segment or niche in which you intend to operate. It shows how much it moves and the figures of your growth. To do this, it uses data from associations linked to the sector.
Next, you must do an analysis of the market, showing who your potential audience is and what their consumption habits are . If it is a business, for example, collect data on the population that lives in the region and what is your income range. Express if there is any plan for the region to attract new residents.
In this phase, if possible, carry out a market study by interviewing potential future clients. Find out if they would be interested in your business and what factors they consider crucial in choosing your product or service.
Study your competition . Make a table with the strengths and weaknesses of each of your competitors. Discover and present the differences that your company will have in relation to the others, that is, what will be your competitive advantage.
3. Develop a marketing and sales plan
Start by defining the « four P » of your business, namely: product, price, place (market) and advertising.
Indicate in detail what you are going to sell, in what price range you intend to operate, who your target audience is and how you intend to advertise your business among them.
4. Prepare the operational plan
Everything that has to do with the structure and operation itself is indicated here, for example:
- Where will the company operate?
- what equipment is needed
- How many employees should be hired and what are their tasks
- Who will be the providers
- What is the production capacity
- How many clients does the company think it will have?
Also build a schedule, foreseeing the necessary steps for the business to get out of paper and, if you have partners, who will be responsible for each of these activities.
5. Present the financial plan
This is where you should plan your cash flow. Indicates the initial investment, estimated costs, forecast revenue and profit margins, as well as the expected return on investment.
The ideal is to do several phases . It starts with the projections for the start of operations, when the business is still expected to be in the red, until it reaches the point of stability. Estimate, based on the studies you have carried out in the other stages and on the trajectory of similar companies, how long each of these phases will last.
The ideal tool for this is Excel spreadsheets or similar programs. These programs allow you to create linked folders. In them, when a variable is modified, the elements that depend on it are automatically recalculated.
6. Show how you will track the business plan
Set goals for the coming months, deadlines to ask for feedback (from customers, partners, employees and suppliers) and business plan reviews. The follow-up will serve to check if the company is up and running and if any adjustments need to be made. Do not forget that the business plan is dynamic and may need to be adapted during execution.
Some management tools can be useful in developing your business plan. For example, the BCG matrix helps you predict the revenue impact of each product. The SWOT analysis is essential to know the strengths and weaknesses of your company and your competitors. The RACI matrix can help to divide the tasks between the partners for the execution of the project.