The business plan is a detailed description of the business that you want to undertake, it is a dynamic project that describes how the business will be operated and developed during a determined period.
- Steps to formulate it
- essential features
- General structure
Definition Of The Business Plan
The business plan is a roadmap for addressing the expected and unexpected opportunities and obstacles that the future holds and for successfully navigating through the unique competitive environment of that business, whether it is a start-up, an expansion of an existing firm, a spin-off from a parent corporation, or even a project within the established organization. (Cyr, p.4)
A business plan is a tool for reflection and work that serves as a starting point for business development. It is done in writing by an enterprising person and in it, he expresses his ideas, the way to carry them out, and indicates the objectives to be achieved and the strategies to be used. It consists of writing, with method and order, the thoughts that you have in your head. Through the business plan, the quality of the business itself is evaluated. In the process of preparing this document, the environment of the business activity is interpreted and the results that will be obtained by influencing it in a certain way are evaluated, the variables involved in the project are defined and the optimal allocation of resources is decided to start it up. (Velasco, p.11) I encourage you to read more about this blog here: Do You Want To Have Your Own Business? Invest In These 3 Things
The business plan is a formal written document that follows a logical, progressive, realistic, coherent, and action-oriented process, which includes detailed future actions to be carried out by both the owner and the collaborators of the company. company to, using the resources available to the organization, seek the achievement of certain results ( objectives and goals ) and, at the same time, establish the mechanisms that will allow control of said achievement. (Borello, p.34)
This planning tool had its origins in the United States in the 1960s (of the 20th century) as a response to the need for corporations to invest their excess capital, but it was not until the late 1970s, as a result of the development boom. business around technology, in Silicon Valley, when it became popular. The following graph demonstrates the phenomenon:
Benefits Of Preparing A Business Plan
A business plan helps you to make the future of your company as close to what you want it to be and not to what “destiny” holds for you. Borrello (pp.31-56) identifies the following benefits:
- Determine which are the most promising business opportunities for the company.
- It allows for determining with greater precision the markets of interest for the company.
- It points out how to participate more actively in those markets.
- It provides the bases for deciding the type of products or services that should be offered to customers.
- Establish objectives, programs, strategies, and plans to follow, which allow better control of the future development of the company.
- It establishes a firm base to plan all the activities of the company.
- Stimulates a more rational use of resources.
- It allows for assigning specific responsibilities and establishing coordinated work programs.
- Facilitates control and measurement of results.
- Create awareness of the obstacles that must be overcome.
- It provides a valuable source of information for current and future reference.
- Facilitates progressive progress towards the most important goals of the company.
- It keeps all members of the organization oriented toward profitability.
- Allows you to evaluate alternative strategies.
- Facilitates practical and effective reviews.
- It allows the development of more effective sales strategies based on the true sales potential of the company.
- Generates the general financial framework of the company.
- Determine which are the most relevant areas that must be controlled.
- It allows for analyzing the situation of the company with respect to its most important competitors.
- It makes it easy to determine things that need to be done better and differently than competitors.
Steps To Formulate A Successful Business Plan
Stutely (p.12) indicates the following methodology:
- Define your business activities.
- Next, define the status your business currently holds
- You must define the external market, the competition you face, and your market position
- Define your objectives for the period covered by the plan.
- Formulate a strategy to achieve the objectives.
- Identify business opportunities and their risks.
- Map out a strategy to limit risks and exploit opportunities.
- Refine the strategies until obtaining work plans.
- Project costs and revenues, and develop a plan
- Document it concisely.
- Get the plan approved.
- apply it.
Business Plan Essential Features
The main characteristics of a good business plan are:
- Prioritize the key business success factors.
- Answer potential investor questions.
- It is clear, does not leave ideas in the air, and uses precise terms.
- It is also short, usually no more than 30 pages.
- It is structured to allow easy reading.
- His presentation is impeccable.
The General Structure Of The Business Plan
The general structure of a business plan could be as follows:
- Executive Summary: offers a general impression of the project, contains the key data, and highlights it, it must provide the reader with all the relevant elements, maximum 3 pages.
- Description of the product or service: the business plan must begin by identifying the need that is going to be covered and the solution proposal that is nothing more than what is intended to be developed.
- Management team: investors believe more in people with experience or who know the business very well, they are also interested in the commitment of each member who works on the development of the project.
- Market analysis: you must identify the market, size it, segment it, put it in a geographical dimension, and analyze the competition and possible new entrants, not only direct competitors but substitutes and complements.
- Marketing plan: define the strategies on the four P’s, seeking to always cover the needs of customers and even better to be above them.
- Business system: describes the steps, the process, necessary to manufacture the product or offer the service, its interactions, and elements. It includes personnel planning, elements of management, development, and organizational culture.
- Schedule: shows realistic planning of the project, and defines the critical path and the milestones of this.
- SWOT Analysis: identify Weaknesses, Opportunities, Strengths, and Threats, how to enhance the positive aspects, and how to develop strategies to counteract the negative ones.
- Financing: it is a key point, it must be a detailed analysis of the financial situation of the business, it includes the financing needs, the expected results, the possible sources of financing, and the generally used financial statements and ratios. You can include an initial valuation of the business through discounted cash flows. If what is sought is risk capital, alternative “exit” options should be proposed to investors.
- Conclusions: Highlight realistic key factors including risks.
Frequently Asked Questions (FAQs)
What Do You Need A Business Plan For?
What are the benefits of the business plan? How does it help with calculation and planning in the company? What information belongs in the business plan? How do you assess opportunities and risks with the business plan? The business plan is the basis for founding a company and for evaluating a business idea.
What Is A Business Plan?
A business plan is the first step in starting a successful business. It defines the core aspects and formulates the business idea of your company. The plan provides an overview of the most important goals and tasks. A business plan contains all information about the products and services offered, the exact costs and forecast sales, as well as the target clientele and the growth potential in the respective market. For example, capital providers such as banks and investors have all the information they need at a glance.
There are many names for one and the same paper:
- business plan
- corporate concept
- business plan
- founder plan
What Is The Structure Of A Business Plan?
Even if there are no binding rules for the structure, it is important that the business plan has a clear structure. In addition to the classic content and structure, there are various specialized variants, for example, take a look at the business plan for the bank – that has to be included for a company loan or the smallest business plan in the world – on a beer coaster.
- Your idea, offer, and target gro
- Market Analysis and Competition
- Your vision and goals
- Your strategy
- Your Marketing
- Legal Form & Taxes
- Founding team and organization
- Financial Plan or “The Numbers Part”
- Analysis of your strengths and weaknesses
- Executive Summary
How Many Pages Does A Business Plan Need?
The scope of a business plan depends on the start-up project. The more complex the project and the industry, the more extensive the plan should be. Business plans with a length of 20 to 25 pages have proven to be ideal, with “outliers” above and below being possible. However, a serious business plan should be no less than 15 and no more than 30 pages.
The breakdown would be as follows:
- cover sheet and table of contents
- Executive Summary: 1-2 pages
- The text part is about 15 pages
- Figures part (consisting of turnover planning 1.2. and 3. year, profitability forecast, liquidity planning, investment planning, and financial plan).
- Appendix (CVs, certificates, press releases, etc.)
What Are The Types Of Structure In Business?
Types of organizational structures
- Hierarchical organizational structure
- Functional organizational structure
- Horizontal or flat organizational structure
- Cross-departmental organizational structures (market-based, product-based, geographic)
- Matrix organizational structure
- Team-based organizational structure
- Network Organizational Structure
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