What is a business plan?
A business plan is the most useful tool that can help you to create a new business and to make it successful. It should be developed before you start your new business, because this tool will help you to take the right decisions in the assignment of resources and its management, to not assume unnecessary risks. At the same time, it guarantees the viability of the business opportunity and assures that the creation of a company goes into the right direction.
Are all business plans the same?
No. Not all the business plans are the same. Plans may differ on the type of business and the level of development in which your business is. It might be simple if you first start a small business. They can differ in their length, appearance, detail of contents and the emphasis on the different aspects of the business.
Which are the different business plan types?
Business plans can be roughly divided in four separate types: miniplans, working plans, presentation plans or electronic plans. They require different amounts of effort and the results are not always proportionately different. This means than a more elaborated plan is not necessarily better than an abbreviated one, it depends on what you want to use it for.
- Miniplan: a short plan that has up to 10 pages. It should at least include some of the key matters, such as business concept, financing needs, marketing plan and financial statements. It is an effective way of testing the business concept or measuring its potentialities. It can serve as prelude to a longer plan.
- Working plan: a plan used to operate your business, intended for internal use.
- Presentation plan: a plan prepared to show it to investors and other companies.
- Electronic plan: an electronic version of your plan that can be transferred to other parties. An electronic plan can be handy for group presentations.
What is a business plan asked to have?
- Efectivity. It has to facilitate the work of the entrepreneur, helping to account the viability of the business or to find new associates or investors.
- Structure. It has to be easy to understand and read, clear and well structured.
- Concision. It has to be written in a direct way, and to be precise, objective and clear.
- Format of presentation. Both the format and the presentation have to be attractive to the reader. It is a good idea to combine text with graphics and pictures.
- Brief. It should have a reduced number of pages to make it more appealing for the reader.
What is the structure of a business plan?
- Cover page. Including the name of your business, your name and contact details and a logo.
- Contents pagination. To make the reading of the document easier.
- Executive summary. An executive summary is an outline of your business vision. It sums up your entire business idea in a short section. The executive summary is important because it introduces the reader to your business idea, it is the first information the reader will have and explains why do you think your business will be successful. It is often helpful to write this section at the end, after you have written the rest of your business plan, so that you are more able to summarise it.
- Company profile: staff. It is necessary to include information on who is involved in your business, outlining ownership and management. The reader wants to know who owns the business, who will manage it, and how it functions internally.
- Company profile: business. It is important to describe and define your company; what it does and how it functions. It is specially necessary to describe the product or service your business will provide, to indicate where your business is or will be located, to provide a history of the business (for ongoing businesses) and to describe the facilities your company uses to operate.
- Business overview: product and services. In this part you have to provide an overview of what your business involves, taking into account the product or service your business will provide and who are the target customers, and explaining why your business might have a competitive advantage and the market place needs your business will satisfy.
- Market assessment. To successfully start a new business you need to know your market. So, in this part you will have to make a description of the position of the sector today, provide information on your target market, identify any market or sector needs, list the main competitors and describe the distribution patterns.
- Market strategy. After the market assessment is done, a market strategy can be established, considering how will you promote your product, how will you focus on a particular target market and how will you remain competitive. Outline any problems you may expect to encounter in the market and possible ways you could solve them.
- Cash flow assessment. Here you will include any relevant financial information that is important for any future business plans, such as projected cash flow, projected profit and loss and start up capital.
- Funds required. In the final section of your business plan you have to include information on the amount of funding you need to start your business. Detail this section as much as possible, indicating the exact areas in which you need funding and the projected amount required.
What things should I take into account before starting?
- What is the product offered?
- Why should clients buy my products and not the competitors?
- What necessity does it satisfy?
- Is it innovative? Why?
- Which is the key aspect of the business idea that justifies the viability of my business?
- What experience and capacities do associates have to carry out this project?
- Which will be the name of my business?
- What legal obligations will I have?
- What permissions and licenses do I need?
What things are important to know?
It is essential that you make an identification of the market and competitors on your geographical area and sector, in order to analyse the possibilities of acceptance and the potential of the product that your business is offering.
- Who are the clients and the dimensions of the market?
- Which is going to be my geographical area of action?
- Who are the suppliers?
- What are the strong and weak points that my business presents?
- What are the prices of the competitors?
Another important aspect is the organization of your business in order to know the manufacture process, and the delivery process to obtain quality in the products you offer.
- Who is in charge of the management and direction?
- How is quality going to be managed?
- Which security and hygiene measures should be taken into account?
- Is there any technical support needed?
- What are the procedures to attend the claims of the clients?
- Are there any environmental rules or measures that should be taken into account?
What is the economical viability of my business and financing?
It is essential to include the following aspects in your business plan: investment plan, financing plan, forecasts of the annual accounts, and provisional balances.
- What is the necessary capital to start my business?
- What is the necessary capital to produce my product?
- What are the sources of finance?
- Will the sources of finance be enough to cover the expenses in a short term?
What sources of finance can I access?
The sources of finance that you can access to finance your project are various and the election might depend on your particular situation and may vary depending on the development of your business. The main sources could be:
- Personal savings
- Familiar lendings
- Short and long term credits
- Bank loans
- Private investors