How to make a business plan?
There are not many entrepreneurs who start their own business and decide to create a business plan for their use. This is undoubtedly a mistake, because a well-drafted business plan, together with a quality logo created in Turbologo; can become a signpost for the company, and allows you to plan costs and manage the enterprise.
Does the company need a business plan?
Both people just trying to start their own business and active entrepreneurs wrongly assume that a business plan is created only for the needs of potential investors or when acquiring funds for running their own business. On the contrary, the business plan should be a useful tool for the entrepreneur himself. It should allow him to organize his company’s objectives and plan a strategy to bring him closer to them. The business plan can have various functions:
- Planning – allows the planning of the objectives set before the company;
- Controlling – allows the analysis of the objectives set, and the results achieved; and makes it possible to assess whether the company is achieving its goals;
- Informational – it is a source of information for investors, lenders, and business partners.
The structure of a business plan depends largely on the purpose for which it is written. It will take a different form if it is written for the entrepreneur’s use; and a different one if it is to be presented to a bank or potential investor. However, it is possible to distinguish basic elements that every business plan should contain.
Structure of the business plan
Project description (summary)
This is the most important part of the business plan, but importantly; it should be written at the very end after all the parts have been written. The executive summary must be structured in such a way that it encourages; for example, a potential investor to read the rest of the document. It must catch his attention in one word.
Remember to describe in it, among other things, the purpose for which the business plan was created; determine the amount and allocation of necessary financial, material, and personnel resources, and give the main data and financial indicators. In addition, a general description of the products or services, the entrepreneur’s skills, experience; or resources that will be necessary for the implementation of the project must be included. It is also worth mentioning the advantages over the company’s current competitors etc.
This part contains information about the company itself, i.e. its name, legal form in which it is or will be conducted; address data, a short presentation of its owners, and history of the company itself. It is worth presenting any awards, distinctions, or certificates that the company or its owner has. You should also briefly outline the purpose and mission of the company.
Characteristics of the enterprise
Here you need to present the business concept of the company; and a detailed description of the object of its activity (depending on whether it is a service company; manufacturing, dealing with sales, etc.). However, The product is characterized by a description of its features and how it differs from other products. It is described how it is distributed, and what technology is used in its production.
It is also necessary to specify the entrepreneur’s copyrights, patents, and trademarks. Similarly, the type of services provided should be described
- The profile of their recipients shall be characterized;
- Distinguishing features of these services on the market;
- Their value for the client.
Internal environment (employees and management)
The strength and success of companies are determined primarily by people. Therefore, it is worth describing here both the qualifications of the management and employees; organizational structure, system of motivation and remuneration of employees, division of responsibilities, and training system.
External environment (market analysis)
This section of the business plan describes the environment in which the company operates. However, In which market it operates (it is worth analyzing this market, its behavior, tendencies, development, its segmentation). It is also necessary to identify and describe the competition in this market. It is also worth analyzing and including the characteristics of potential customers (why they will be interested in the product or service, what are their requirements, etc.). In this section, you can conduct a so-called SWOT analysis (an analysis of the strengths; weaknesses, opportunities, and threats of the market; it can also be a completely separate section of the business plan), as well as sales forecasts; give the expected size of the market share and describe the assumed barriers to entry in a given market.
Advertising, marketing, and sales principles
First of all, describe planned advertising strategies and campaigns, advertising budget; methods of reaching customers, distribution methods, planned promotions, prices, discounts; methods of obtaining business partners, etc., planned forms of payment, and after-sales services. Financial analysis
This is undoubtedly one of the most important parts of the business plan; which may determine the success of the entire project. It should present the investment plan along with the projected sales of goods or services and the costs that will have to be incurred to achieve the objectives.
The financial analysis should consist of:
- A balance sheet;
- Profit and loss account;
- Cash flow statement;
- Break-even analysis;
- A list of fixed assets.
Schedule of activities
It is worth planning the schedule of activities in detail because only the strict realization of the assumed objectives following the adopted program of activities will allow them to be fully carried out. Also, It is assumed that the schedule should be drawn up for at least 5 years. It is necessary to present the company’s goals and the expected deadlines for achieving them; as well as to specify the ways to achieve the goals and foresee the factors that may affect their realization.
Each business plan should also be accompanied by several additional documents; such as the results of market research, job descriptions, copies of agreements made, CVs of executives; patent data, and a list of institutions that co-finance the entrepreneur’s other ventures, etc.
A business plan is not an encyclopedia’ that theoretically contains valuable information; it should not be boring, because then no one will want to read it. Also, A business plan serves as a map and a compass, showing the right path and directions for development. It is a plan in which you describe the enterprise and present ways to achieve your goals along with an assessment of their effectiveness.